Doug Langley and Christine Ashton wrote a Tax Alert – “CRA on the hunt for House Flippers”
This month the CRA announced several new significant changes in regards to the taxation of the sale of residences. As a result of these changes, the CRA will now have new tools for going after individuals who renovate and sell homes for a profit (also known as “flippers”).
As is well known, when a residence is sold, the economic gain may be tax exempt. The relevant tax exemption provision may found at ss. 40(2)(b) of the Income Tax Act. The formula therein provides that the exemption applies where the test is satisfied and the property meets the definition of “principal residence”. Falling within the exemption is not as simple as “I sold my home or cottage”.