Beware the Taxman When Buying and Selling Often

Beware the taxman when buying and selling often

When you sell a property that isn’t your principal residence and make a profit, half of the amount is taxable. This is the so-called capital gains tax and it’s pretty straight forward, but every situation is different. It all depends on how the Canada Revenue Agency views the transaction. Click here to view the full article.

 

Just because you live in a house or condo, it’s not automatically your principal residence and therefore exempt from capital gains tax. As this article shows, if you are buying and selling frequently, i.e., flipping, Canada Revenue may rule that you are subject to capital gains tax even if you lived in every one of those properties. Not only that, if they decide that you are buying and selling properties as a business, you will have to pay tax on the full amount of the gain, not just 50%! Since there aren’t any clear rules or guidelines as to what constitutes “flipping”, you could find yourself fighting Canada Revenue over tax liability even if you had legitimate reasons for moving often. You might ultimately persuade them that you shouldn’t have to pay the tax, but you’d still be stuck with the legal fees!