Flip or tax flop

Starting in January, profits from sales of houses occupied for less than a year will be 100% taxable as income—barring certain exceptions, like death or work relocation.

  • The change aims to stop house flippers from abusing tax exemptions that apply to the financial gains from the rise in the value of a primary residence. 

Driving the news: Even before the law is enacted, the Canda Revenue Agency (CRA) is taking action, bringing cases of perceived missteps by house flippers to court.

  • The success of these types of trials has been mixed, but the most recent rulingon such a case mostly went in the favour of the CRA. 

Why it matters: Increasing taxes on a practice in which the only goal, really, is increasing the value of a home is one of the ways the government is trying to cool excessive price growth in the Canadian housing market. 

Yes, but: There are concerns that the bill won’t do much to dissuade house flippers as they’ll factor the extra tax into their budgets and increase the price they list a home for accordingly.