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WHAT IS THE NEW ANTI-FLIPPING LAW?
Do you know that in 2023, CRA introduced a new anti-flipping regulation?
It states that any profit you make through the sale of a property that you have owned for less than a year or 365 days precisely, is considered business income, and 100% of it is subject to hatHAT taxation.
The profit you make from the property may be subject to a marginal tax rate of up to 53.5% if it is owned in your personal name. If the property is held in a corporation’s name, the profit is subject to 12.2% corporation tax and taxed as active business income.
Even if you had previously moved into the property before closing, this regulation still applies to your principal residence.
The Assignment Sale is covered by this rule as well. The profit you make, net of HST, is recorded as income. If you buy a pre-construction property and sell the contract as an assignment before owning it for for full 365 days, the profit is fully taxed.
If one of the following applies to your transaction, it might be exempt from this treatment:
– Title holder passes away
– A new member of the family who is linked
– Divorce/separation
– Possibility of personal safety issues as a result of property ownership
– Illness or impairment
– Moving for a legitimate job-related purpose
– Getting fired from your job
– Bankruptcy/insolvency
– Expropriation or destruction of your property
Feel free to reach out if you need help with your specific situation, it would be my pleasure to help you!
Bhupinder Singh
Sales Representative
Century 21 First Canadian Corp.
P: 647-323-5310
E: getrealwithinder@gmail.com
WHO IS EXEMPT FROM THE NEW FOREIGN BUYER BAN?
Government of Canada has recently imposed a ban on foreign buyers, below is the list of people who are exempt from this Ban:
– Canadian Citizens and Permanent Residents of Canada
– International Students who meet the necessary criteria, which includes having spent the majority of the preceding five years in Canada. They would be able to spend no more than $500,000 on a property.
– Work Permit Holders who have paid taxes and worked in Canada for at least three of the four years before buying a property.
– Diplomats, Consular Employees, and Representatives of International Organizations lining in Canada
– Foreign nationals holding a temporary residency visa, including Refugees and Persons Escaping War.
Additionally, exempt are structures with more than three residential units and recreational real estate; including cottages, cabins, and other second houses.
The purchase of real estate properties/land will be prohibited for corporations and other non-Canadian entities as well as Canadian businesses under foreign control.
Feel free to reach out if you need help with your specific situation, it would be my pleasure to help you!
Bhupinder Singh
Sales Representative
Century 21 First Canadian Corp.
P: 647-323-5310
E: getrealwithinder@gmail.com
