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Taxation on Flips

Residential property featuring a "For Sale" sign in the front yard.
House with a "For Sale" sign

Taxation on flips is different from most other real estate investment strategies. In fact, flipping homes isn't really a real estate investment at all; rather, it's an active way to earn income. At least, in the eyes of the CRA, they tax 100% of any profits made on flipping homes at your marginal tax rate, rather than 50%, as they would for a capital gain.

The CRA has also implemented a new anti-flipping rule starting January 1, 2023. If you sell a property within 365 days after purchasing it, you are required to report the profit you make as business income unless you meet one of the exclusions.

There are intricacies to this, of course. If you are considering taking on a flip, it is best to consult with your accountant to set yourself up in the best way possible. This is why some investors set up a corporation to purchase and hold their flip. Since corporations are taxed at 12.5%, there may be significant savings if you plan to flip multiple properties.

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