Federal Anti-Flipping Rule

The Federal Anti-Flipping Rule is a provision under the federal Income Tax Act (Canada) effective January 1, 2023 (as of 2026-07-27 — verify current), that deems profit from the sale of a residential property held for less than 365 days (as of 2026-07-27 — verify current) to be fully taxable business income. The principal residence exemption does not apply to such deemed business income unless specific life-event exceptions are met. This is a federal income tax rule separate from BC's Home Flipping Tax Act, SBC 2024, which took effect January 1, 2025 (as of 2026-07-27 — verify current); both may apply to the same sale. Verify current details with a BC lawyer, notary, or licensed tax professional before acting.

No. The Federal Anti-Flipping Rule is a federal Income Tax Act (Canada) rule that treats profit as business income for federal income tax purposes when residential property is sold within 365 days (as of 2026-07-27 — verify current). BC's Home Flipping Tax Act, SBC 2024, is a separate provincial tax that imposes tax on the profit from the sale of residential property held for less than two years (730 days) (as of 2026-07-27 — verify current), effective January 1, 2025 (as of 2026-07-27 — verify current). Both can apply to the same transaction. Verify current details with a BC lawyer, notary, or licensed tax professional before acting.

Under the federal Income Tax Act (Canada), if a residential property is sold or disposed of within 365 days (as of 2026-07-27 — verify current) of its acquisition, the profit is deemed to be fully taxable business income, not a capital gain. The 365-day period (as of 2026-07-27 — verify current) runs from the date of acquisition to the date of disposition. Certain life-event exceptions may apply. Verify current details with a BC lawyer, notary, or licensed tax professional before acting.

The federal Income Tax Act (Canada) provides exceptions to the deemed business income treatment if the sale is due to certain life events, including death, household addition (e.g., birth or adoption), marriage breakdown or divorce, disability or serious illness, employment relocation, insolvency, or involuntary termination of employment (as of 2026-07-27 — verify current). The Canada Revenue Agency (CRA) administers and interprets these exceptions under federal income tax law. Verify current details with a BC lawyer, notary, or licensed tax professional before acting.

Under the federal Income Tax Act (Canada), if the Federal Anti-Flipping Rule applies because the property is sold within 365 days (as of 2026-07-27 — verify current) and no life-event exception is met, the profit is deemed to be business income and the principal residence exemption is not available. If a life-event exception applies, the principal residence exemption may still be claimed if all other federal requirements are met. Verify current details with a BC lawyer, notary, or licensed tax professional before acting.

When the Federal Anti-Flipping Rule applies under the federal Income Tax Act (Canada), the profit from the sale is treated as 100% (as of 2026-07-27 — verify current) taxable business income, not as a capital gain which would only be 50% (as of 2026-07-27 — verify current) taxable. This means the entire profit is included in the seller's income for federal and provincial income tax purposes. The seller must report the profit on their federal income tax return to the Canada Revenue Agency (CRA). Verify current details with a BC lawyer, notary, or licensed tax professional before acting.

The federal Income Tax Act (Canada) applies to dispositions of residential property, which may include assignment sales depending on the structure and timing of the transaction, effective January 1, 2023 (as of 2026-07-27 — verify current). Whether a specific pre-construction assignment triggers the Federal Anti-Flipping Rule depends on federal income tax law interpretation and the facts of the transaction. Additionally, BC's Property Transfer Tax Act, RSBC 1996, c. 378, may apply to assignments. Verify current details with a BC lawyer, notary, or licensed tax professional before acting.

The Federal Anti-Flipping Rule is part of the federal Income Tax Act (Canada) and is administered and enforced by the Canada Revenue Agency (CRA), not by any BC provincial authority. BC's separate Home Flipping Tax Act, SBC 2024, is administered by the BC Ministry of Finance. Taxpayers in BC selling residential property within 365 days (as of 2026-07-27 — verify current) must comply with both federal and provincial rules. Verify current details with a BC lawyer, notary, or licensed tax professional before acting.

Both the federal Income Tax Act (Canada) rule (365-day threshold, as of 2026-07-27 — verify current) and BC's Home Flipping Tax Act, SBC 2024 (730-day threshold, as of 2026-07-27 — verify current), can apply to the same sale, as they are separate regimes with different holding periods and tax treatments. The federal rule treats profit as business income for federal and provincial income tax purposes; the BC Home Flipping Tax imposes a separate provincial tax on profit. There is no credit or offset between the two. Verify current details with a BC lawyer, notary, or licensed tax professional before acting.

Official guidance on the Federal Anti-Flipping Rule under the Income Tax Act (Canada) is published by the Canada Revenue Agency (CRA) at www.canada.ca, including technical interpretations and guidance notes (as of 2026-07-27 — verify current). For BC-specific matters such as the interaction with BC's Home Flipping Tax Act, SBC 2024, consult the BC Ministry of Finance at www.gov.bc.ca. Always verify current details with a BC lawyer, notary, or licensed tax professional before acting.