Quick Tips: Bill C-32 – What’s the New Residential Property Flipping Rule?
There’s a new law that came into effect on January 1, 2023, along with the Foreign Buyer Ban. This one focuses on trying to limit house flipping, or speculation, by taxing the gains on any home that sells within 12 months of the purchase.
This new law requires all sellers, who have not owned the home for longer than 12 months, to claim the gains on the sale as business income.
This is different from previous rules regarding income properties as the gains on those have to be claimed as Capital Gains. Considering home sellers have always been able to sell their primary residence at any time without being taxed, we consider this to be a significant change.
There are some exceptions to the rule:
- Serious illness or disability
- Birth of a child
- Job loss or relocation
- Threat to personal safety
- Property destruction