What Canada’s New Home Flipping Tax Means For Sellers

05.3.23 | Selling

Unfortunately, the steadily climbing cost of real estate in Toronto and many other Canadian cities has made homeownership much more difficult for many people. While these prices are in part due to the high demand from traditional buyers, for-profit investors are playing a role as well. 

In the face of these rising costs, Canada has introduced new legislation in the form of an Anti-Flipping Tax which changes how capital gains are taxed following the sale of a home.

These new rules not only carry significant implications for investors but some everyday homeowners may also be impacted as well.  

So whether you’re actively searching for an investment opportunity in the Toronto market, or are planning on selling your current home, you’ll want to be up-to-speed on how this new tax will affect your returns. 

Cooling an Active Market

It’s no doubt that Toronto’s famously competitive market was influential in the introduction of the anti-flipping tax. Although the market has seen more neutral conditions over the past 18 months, Toronto real estate still has a reputation for being expensive. 

In addition to the federal government, the City and Province have both spearheaded various initiatives in an attempt to make homes more attainable for this generation of buyers in recent years. However, it has become increasingly difficult for these efforts to stay on pace with rising costs.


Want to make the most of your home sale? Explore these related readings for advice on how to do exactly that. 


Anti-Flipping Tax

So what is the anti-flipping tax and who will it impact most? Let’s take a closer look. 

Speaking generally, ‘flippers’ are home buyers who purchase a property with the specific intent of re-selling it for a profit in a short period of time. Under the new legislation, any Canadian who sells a home they’ve owned for less than 12 months will be viewed as a flipper and will face the anti-flipping tax following their sale. 

Here’s the major detail: Flippers will be subject to taxation on 100% of capital gains earned from their sale. They’ll also be ineligible for the Principal Residence Exemption, meaning that there’s no way of getting around it. 

As a brand-new initiative, this tax only applies to homes purchased on or after January 1, 2023. 

Long Term Goals

The government has two primary goals with the enforcement of the anti-flipping tax. The first is to ensure that investors who are operating with the intent to earn a profit are paying appropriate taxes on what is ultimately a business actively. 

The second is to potentially dissuade new investors from entering the market by curbing profit potential. With fewer active investors, the hope is that housing prices in Toronto won’t rise as quickly. Additionally, buyers who are looking for a place to call home will face lesser competition on the market and have a better chance of finding something within their budget. 

One thing to keep in mind is that the anti-flipping tax is still fairly new. As a result, it will still be some time before we witness a larger-scale market impact. However, home sellers in Toronto should be aware of this new legislation as it could affect them come tax season. 


Looking for more helpful tips on navigating the various rules and regulations of real estate? Check out these blog posts. 


Potential Exemptions 

Of course, not every homeowner who chooses to re-sell a home they purchased less than twelve months ago will be doing so with the intention of earning profit. With that in mind, the Canadian government has listed a few specific circumstances in which exemptions apply. Such as – 

  • Divorce or separation (more than 90 days prior to selling)
  • Severe unforeseen damage to the home
  • Relocation to another city or province
  • The home does not have ample room for new family members
  • A homeowner has become critically ill, disabled, or passed away
  • The seller has recently been fired or declared bankruptcy

The relatively limited scope of these exemptions is intentional. The government is hoping that by reducing any potential wiggle room they can ensure these taxes are paid. 

Thinking about selling? Our industry-leading strategies and guidance can ensure you get the best possible result in Toronto’s ever-shifting market. Call 416-587-3300 to get in touch, or click here to send us an email