The residential property flipping rule announced in the federal budget 2022 to ensure profits from flipping properties are fully taxed, any person who sells a residential property they have held for less than 12 months would be fully taxed on their profits as business income. Exemptions will apply if the sale is for certain reasons, such as a death, disability, the birth of a child, a new job, or separation. The measure would apply in respect of residential properties sold on or after January 1, 2023.
Property flipping involves purchasing real estate with the intention of reselling the property in a short period of time to realize a profit. Profits from flipping properties are fully taxable as business income, meaning they are not eligible for the 50 percent capital gains inclusion rate or the Principal Residence Exemption.
The Government is concerned that certain individuals engaged in flipping residential real estate are not properly reporting their profits as business income. Instead, these individuals may be improperly reporting their profits as capital gains and, in some cases, claiming the Principal Residence Exemption.
For a complete federal budget, please visit: https://budget.gc.ca/2022/report-rapport/toc-tdm-en.html
Post Your Comment: