Oct 24, 2017
By Michael Kramer
The Canada Revenue Agency is analyzing more than 2,800 transactions involving cases of pre-construction condominium flipping in Toronto – to determine whether audits need to be carried out.
In the Toronto area the CRA says audit work has increased substantially on what are called “assignment sales” or “shadow flipping” – where a condo is purchased from a developer – and sold to another buyer before the unit is completed.
The tax angency says profits from flipping real estate are generally considered to be fully taxable – as business income.
As of 2016, homeowners are required to report the sale of their principal residence on their tax return – even if the gain is fully excluded by the principal residence exemption.
The agency says real estate deals in the GTA and Vancouver have been the subject of greater scrutiny – and new technologies and faster computers are helping to more effectively access, integrate and analyze data.