Jump to content

Property Flip -- Taxable income or capital gains?


Recommended Posts

I purchased a property in late-2021, did some work, then sold it in early-2022. Since the intent was to achieve gains on the flip, i've reported this using form t2125. When I report it this way, I face full tax rate on the entire gain as if it is income. Have I done this correctly or can it be reported as capital gains instead so that the taxes are half as much?  



Link to comment
Share on other sites

Clearest  guidance I've found is "If you buy a home or condo, and then sell it soon after you get title — certainly if it’s within 18 months or so — the CRA will usually consider that you have “flipped” the property, and that any gain is fully taxed as business profit, not half-taxed as a capital gain. This also means that you don’t get the principal-residence exemption, even if you moved into the home, because the exemption is available only for capital property, not for business inventory. And if you had the intention — or even a “secondary intention”— of selling the home at the time you agreed to buy it, then the CRA will be legally correct." Source: https://www.krp.ca/november-tax-news-property-flipping-rules-around-investment-income-in-a-corporation-and-more 

As such, I've completed T776 for income on one renter and T2125 to declare the property purchase and sale business income. 

I'm hoping someone tells me i have this wrong and so that i cut my tax bill in half!


Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Create New...