What is the federal anti-flipping rule?

Direct answer

Sell inside 365 days and the whole profit is taxed as business income rather than a capital gain, and the principal residence exemption is gone. All of the gain is taxable instead of half, and there is no discretion in it: sections 12(12) and 12(13) of the Income Tax Act deem the sale to be business income, in force since January 1, 2023. Ten life events can overturn that deeming, and only these ten: a death in the family, a birth or adoption, a marriage or common-law breakdown, a threat to your safety, serious illness or disability, a work relocation that puts you at least 40 kilometres closer to a new workplace, involuntary termination, insolvency, destruction of the property, or expropriation. BC's Home Flipping Tax is a separate tax with its own clock, not an extension of this one. It runs to 730 days, it is charged on the profit at up to 20%, and it applies whether or not the federal rule caught you. Both can hit the same sale. What that costs, on a Burnaby condo bought for $700,000 and sold for $850,000: at six months the $150,000 profit is added to your income in full and BC takes $30,000, and at twelve months and one day only $75,000 is added to your income while BC still takes $29,918. The federal side is a cliff at 365 days. The provincial side barely moves until much later: it is $23,014 at fifteen months, $14,795 at eighteen, and zero only at two years. Almost the entire benefit of holding past a year is federal. Run the real numbers with an accountant before you sell, not after.