Flipping could land you with a large tax bill
Investors hoping to make a quick buck by buying, renovating and selling properties should look into the tax implications of doing so. The Financial Post cites a case of a Montreal woman who found herself fighting a demand from the Canada Revenue Agency after flipping a number of properties and paying tax as a capital gain with only 50 per cent liable to be taxed. The CRA maintained that because of the way she had bought and sold the properties the profit should be taxed as business income which means the entire profit is taxable. Elements such as the type of property involved, how long the property is owned for, the number of similar transactions the person undertakes and their intention upon purchase are all used in CRA’s assessment of the correct tax.