Speculators used to flipping houses are in for a surprise when Canada’s new anti-flipping tax is introduced.
It’s still too soon to accurately predict if a tax on flipping houses will put a chill on investor profits.
Federal housing minister Ahmen Hussen has yet to report on how the tax will work. What the Liberal government has said so far is this:
- The tax will curb speculation caused by flipping houses.
- The strategy is expected to cool high housing prices.
- Investors will be considered to be flipping houses for profit if they hold a residential property less than a year.
Flipping houses in Ontario? Qualify for private mortgages.
Who’s Exempt From Taxes for Flipping Houses
Not all shortly lived housing purchases will be taxed. Ontarians flipping houses because of a pregnancy, death, new job, marital breakdown, serious illness, or disability will be exempt. Any change in your life that legitimately forces you to sell a recently purchased home may qualify.
- sales of vacant land
- a natural or man-made disaster that destroys, condemns, or damages your home
- or having your home condemned.
What to know about buying investment property in Ontario.
Eligible Deductions Expected
Some deductions are expected to be eligible for favourable tax treatment. Government has stated sellers will be able to deduct certain costs they incur while flipping houses. Details on those will be announced later.
Make a living flipping houses in Toronto.
What’s Behind a Tax on Flipping Houses
Speculation taxes on flipping houses are part of the federal Liberal 2021 election platform. Where government is headed on investors making a profit from flipping houses is evident from comments like this on REITs (real estate investment trusts): “Homes should be for people to live in, not financial assets for investment funds to speculate on.”
Why you need a real estate lawyer in Ontario to transfer title to property you own.
The tax puts a damper on investors who claim principal residence exemptions while flipping houses soon after purchase or transferring title. Starting with the 2022 tax year, profits from home sales will be treated as capital gains.
How the Tax Affects Resellers
Sellers suspected of flipping houses can already be denied the principal residence exemption. That leaves you vulnerable to having any profits assessed as business income, instead of earning the 50% capital gains deduction available to homeowners.
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Business income is taxed at 100%. That property you purchased for $450,000, upgraded, and flipped for $600,000 may net you an $100,000 profit, after renovation costs are deducted. If that pushes you into Ontario’s highest income tax bracket (50%), by the time CRA collects its share, you could be left with $50,000.
Business taxes can also be charged retroactively if CRA decides you purchased a home with flipping in mind. CRA may even claw back HST (harmonized sales tax) rebate for a pre-construction condo you buy or home you build.
Buying commercial investment property in Ontario.
Why You Need a Real Estate Lawyer
Before you decide to flip investment property you own, drop off your agreement of purchase and sale to any Axess Law open law office in Ontario. We review your legally binding contract to ensure it contains essential clauses that can protect your seller’s right to keep the deposit if a buyer withdraws without good cause.
What to look for in a seller representation agreement (Ontario).
Buyers who find fault with an investment property after they sign the agreement of purchase and sale may ask to amend their offer, or have you make major repairs. Axess Law can negotiate with a buyer’s lawyer when potential property deficiencies threaten to overturn your plans for a quick flip and resale.
If you plan to continue to accept offers while possible buyers conduct home inspections, we include a 48-hour clause in your agreement that can require buyers to make an immediate decision.
When business or family affairs take you out of town during a real estate sale, Axess Law’s virtual real estate lawyers go online to conduct transactions via remote, online video conferencing software. Closing sales from afar is no problem as long as the property you intend to flip is located in Ontario. Our virtual lawyers meet with you by secure, confidential video conference anywhere you are.
Easy to use virtual real estate lawyer services in Ontario.
Buying and selling real estate on the same day is made easier when you use Axess Law’s experienced real estate team. We liaise with banks, credit unions, trust companies, or private lenders to discharge existing mortgages. Your new mortgage documents are signed, executed, and returned to your lender on time.
Need time to get mortgage terms you find more favourable? Axess Law’s licensed legal professionals negotiate with buyers’ or sellers’ lawyers to amend closing dates in your agreement of purchase and sale.
Questions to ask a real estate lawyer.
When your negotiations are complete, we search title to your property to find construction liens or financial encumbrances, and advise you what to do if they stand in the way of closing your sale.
Your final statement of adjustments includes your share of property taxes and utility payments, and shows the amount you paid or received as a good faith deposit. We explain all your legal fees and disbursements, and answer any questions you may have.
Axess Law for Flat Fee, Affordable Legal Services
Axess Law’s flat fee real estate lawyers make buying or selling a home more affordable. Our lawyers cost less than you may have paid for traditional legal services in past because you get only the assistance you actually require. Sell Ontario properties for $799.99 and up plus HST, or purchase for $999.99 and up plus HST. Adding names to house titles (Ontario properties only) costs just $649.99 and up plus HST. Our legal fees are all inclusive. You get no surprises or unexplained charges with your final statement of adjustments.
What a real estate lawyer does.
Convenient, Remote Legal Services Anywhere in Ontario
Now you can e-sign real estate documents when you flip property anywhere in Ontario. Axess Law’s virtual real estate lawyers witness and sign legal documents to conclude your home sale or purchase using only secure online video conferencing software. Your entire transaction is confidential, and you can use any home computer, laptop, or compatible mobile device to conduct legal transactions from any location, at any time that’s convenient for you.
House flipping in Ontario? Find real estate lawyers near you.
Book by Phone or Go Online
Axess Law makes it convenient to schedule your own appointments. Just use our easy online booking form to find dates and times that work for you. Make day or evening appointments, 7 days a week, with experienced real estate lawyers. Or, if you prefer, dial our 1-647-479-0118 lawyer line, toll free to 1-877-522-9377, drop by any of our open Greater Toronto Area or Ottawa law offices to find lawyers you can work with.
Axess Law has onsite parking, and easy transit access.