What is the federal anti-flipping rule?

Direct answer

Effective January 1, 2023, CRA's residential property flipping rule (Income Tax Act s. 12(12)–(13)) deems any sale of residential property held less than 365 consecutive days to be 100%-included business income — NOT a 50%-inclusion capital gain — with the Principal Residence Exemption (PRE) UNAVAILABLE. There is no discretion: if you bought and sold within 365 days, the gain is fully taxed at your marginal rate by default. Ten life-event exceptions can overturn the deeming: death of a related individual, addition to household (birth/adoption), marriage or common-law breakdown, threat to personal safety, serious illness or disability, work relocation ≥40 km closer to the new workplace, involuntary employment termination, insolvency, destruction of the property, or expropriation. The rule is federal and stacks ON TOP OF BC's separate Home Flipping Tax (which extends the holding-period clock to 730 days and adds up to 20% provincial tax). Worked example: a Burnaby condo bought January 2026 for $700K and sold July 2026 for $850K — $150K gain. Federal anti-flipping rule treats $150K as 100% business income (no capital gains treatment, no PRE), and BC Flipping Tax adds 20% × $150K = $30K. CPA review is essential before any short-hold disposition.