Blog > The Anti-Flipping Tax in Markham: CRA Rules That Catch Accidental “Flippersâ€
The Anti-Flipping Tax in Markham: CRA Rules That Catch Accidental “Flippersâ€
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What happens if I sell my Markham home within a year of buying it
Since January 1, 2023, the federal residential property flipping rule treats profit from selling a home owned for less than 365 consecutive days as business income. That means the full profit is taxable, the principal residence exemption is not available, and any loss is denied. The rule does not apply if the sale happens because of, or in anticipation of, a listed life event, such as a death, a new household member, a separation of at least 90 days, serious illness or disability, a job loss or relocation, insolvency, or the property’s destruction. Keep records that show why you sold.
What the Rule Says
The rule, found in subsection 12(12) of the Income Tax Act, applies to housing units in Canada, and to rights to acquire them such as pre-construction assignments, sold on or after January 1, 2023. A property is a “flipped property” if it was owned for less than 365 consecutive days before it was sold, unless a life event exception applies.
Michael John Lau, a REALTOR® with the Kaizen Real Estate Team, one of the most active real estate teams in Markham and York Region, raises this rule with clients early whenever a sale within the first year is possible, because the tax result can change the whole plan.
How Much More Tax It Can Mean
Here is an illustration. A buyer purchases a Markham home for $1,000,000, makes some updates and sells 10 months later for $1,080,000. After closing costs and improvements, the profit is $40,000.
| Tax treatment | Amount added to taxable income |
|---|---|
| Principal residence exemption applies | $0 |
| Capital gain at the 50% inclusion rate | $20,000 |
| Flipped property, taxed as business income | $40,000 |
The extra amount is taxed at your marginal rate. If prices fall and you sell at a loss within 365 days, the loss is deemed to be nil, so it cannot reduce your other income.
The Nine Life Event Exceptions
According to the CRA, a property is not a flipped property if the sale is due to, or in anticipation of, one of these events:
| Life event | Key condition |
|---|---|
| Death | Of the owner or a related person |
| Household addition | A related person joins the owner’s household, or the owner joins theirs, such as a birth, adoption or caring for a parent |
| Breakdown of a marriage or common-law partnership | Living separate and apart for at least 90 days before the sale |
| Threat to personal safety | Of the owner or a related person, such as domestic violence |
| Serious illness or disability | Of the owner or a related person |
| Involuntary termination of employment | Of the owner or their spouse or common-law partner |
| Eligible relocation | For work, business or full-time post-secondary study, for the owner or their spouse or partner |
| Insolvency | Of the owner |
| Destruction or expropriation | Of the property, such as from a disaster |
Wanting a bigger home, a better school area or a quick profit is not on the list.
Thinking of selling a home you bought within the last year? Call Michael John Lau, REALTOR®, at (416) 700-0286 to plan your timing alongside your accountant.
A Closer Look at Job Relocation
The relocation exception generally relies on the Income Tax Act’s definition of an “eligible relocation,” which usually requires that the new home be at least 40 kilometres closer to the new work or school location than the old home was. A move from Markham to another part of the GTA for the same job may not qualify. Confirm the details with your accountant before you list.
Owning More Than 365 Days Is Not Automatic Protection
Holding a property for a year or more takes it outside the deeming rule, but it does not ensure capital gains or principal residence treatment. The CRA notes that it remains a question of fact whether profit from a sale is business income or a capital gain. Frequent buying and selling, renovating to resell, or a clear intention to profit can still lead the CRA to treat a sale as business income.
Assignment sales of newly built homes can also carry GST and HST, which is a separate issue to review with your advisor.
How to Document a Life Event
- Death: death certificate and estate documents.
- Separation: separation agreement or other proof of the date you began living apart.
- Illness or disability: a letter from a medical professional explaining the need to move.
- Job loss: the termination letter and record of employment.
- Relocation: the job offer or transfer letter, with both addresses and work locations.
- New household member: birth or adoption records, or evidence of caring for a relative.
According to a March 2026 summary by Crowe MacKay, no special form is required to claim a federal exception. You report the sale normally and keep supporting documents in case the CRA asks.
If You Have to Sell Early
- Speak with an accountant before you list, not after you sell.
- Identify whether a life event applies and gather the documents.
- If no exception applies, compare selling now with waiting until you pass 365 days of ownership.
- Keep every receipt for improvements and selling costs, which reduce the profit.
Ultimately, the decision is yours. The goal is to make sure you have all the information before you sell.
Next Steps
- Request a free home evaluation: see what your home could sell for now.
- Selling your Markham home: how Michael plans each sale.
- What it costs to sell in Markham: the costs that reduce your profit.
Frequently Asked Questions
What is the 365-day anti-flipping rule in Canada?
Since January 1, 2023, profit from selling a housing unit owned for less than 365 consecutive days is treated as business income, unless a life event exception applies.
Can I claim the principal residence exemption if I sell within a year?
Not if the property is a flipped property. The principal residence exemption is not available, and the full profit is taxed as business income.
What life events are exempt from the flipping rule?
Death, a household addition, separation of at least 90 days, a threat to personal safety, serious illness or disability, involuntary job loss, eligible relocation, insolvency, and destruction or expropriation.
Does the flipping rule apply to pre-construction assignments?
Yes. The rule covers rights to acquire a housing unit, such as an assignment, as well as completed homes.
Is my home safe from the rule after 365 days?
It is outside the deeming rule, but the CRA can still treat profit as business income based on the facts, such as frequent buying and selling or renovating to resell.
Do I need to file a form to claim an exception?
Generally, no special federal form is required. Report the sale and keep documents that support the life event in case the CRA asks.
Work With Michael John Lau in Markham
Michael John Lau helps Markham homeowners plan sales with the full picture in mind, including timing rules that can affect what they keep. He works alongside your accountant and lawyer so the sale fits your situation. The goal is no surprises at tax time.
📞 Contact Michael John Lau, REALTOR®
🌐 www.callmikelau.com
Need to sell sooner than planned?
Michael John Lau can help you plan the timing of your sale while your accountant reviews the tax rules.
Michael John Lau, REALTOR® · Markham, Ontario · (416) 700-0286
Disclaimer. Michael John Lau is a licensed REALTOR® serving buyers and sellers in Markham, Ontario and the Greater Toronto Area. Information on the residential property flipping rule is from the Canada Revenue Agency and a Crowe MacKay summary (March 13, 2026), as available on October 7, 2026. The example is for illustration only. Tax rules are complex and fact-specific. Michael John Lau is not a lawyer, accountant, tax advisor or mortgage professional. This article is general information, not legal, tax or financial advice. Speak with a qualified professional about your own situation.