Capital Gain or Flip

QUESTION: My sister bought recreation property in BC for $100,000 ten years
ago. Now she wants to sell at $200,000. Her capital gains would be at 50% of
the profit? My question is if i bought if from her privatley for 200k and
put my name on title and later take hers off. When I sell the property for,
say $250,000 in 6 months or so, what would be my capitol gain?

david ingram replies:

If it was a capital gain, you would pay tax on 1/2 of $50,000.


If you are buying for $200,000 intending to sell in six months, you likely
do NOT have a capital gain. You are buying with the intention of flipping
and "flipping" is taxable at straight tax rates.

The $50,000 profit would go on line 135 as a business.

Go to and read the Capital Gains chapter in the "Tax Guide"
section in the top left hand box.

The following older question and answer will help as well.
A "friend" who is a BC realtor and has your same question presented to her
from time to time recently attended a seminar that was related to this
subject. As a result she was able to provide me with some interesting
thoughts to ponder concerning
"intent" and "professional background" when it comes to "flipping houses"
and tax in Canada. You may possibly be looked at as a Developer with all
subsequent tax implications.

Read the full article at <>;


david ingram replies:

In Canada, the purchase and sale of any piece of real estate with or without
renovations is considered a sale and subject to straight income tax unless:

1. It was bought for and clearly used as your personal residence and was
intended to be used for an indefinite period of time which is usually in the
five to ten year range.

2. It was bought as and used as a recreational property

3. It was bought for the purposes of earning long term rental income.

In the case number 1, there is no tax.

In the case of numbers 2 and 3, the sale is treated as a capital gain and
only fifty per cent of the profit is taxed at your regular tax rates.

Lots of / many (anyone caught) are taxed full tax rates when they buy a
house, move in, fix it up and sell it a year or two later and then do
another one.

Of course, most are NOT caught in these circumstances.

However, "any" flip is going to be straight income unless the person can
prove that they bought it to live in and then:

* married a person with three children and it is not big enough (had to sell
and bought bigger)

* were transferred to another city (had to sell to buy in new city)

* lost their job, were injured, etc. and can no longer afford to move in. In
this case, they would have to show that they had the finances to have paid
for it when they bought it. (Not only can they not afford it but they have
moved into their parents' basement (boomeranged).

* Inherited a house from their parents and do not need it any more. (are
living in the new house)

You can read more by going to - click on tax guide in the top
left hand corner and then click on the "capital gain" section.


This older q & A also gives an idea

My daughter is closing on a presale Yaletown condominium this summer. She
is working until Christmas in Alberta. She returns to Vancouver from Jan to
May and if the job becomes a full time position, then she may return to
Alberta to live. At the time of presale, February 2004, we thought that the
suite would be assigned to her and that she would live in the suite.

I was hoping that she could declare the suite as her permanent residence
since she is only renting in Alberta and the work is not permanent. In
May 2007, she could decide to keep or sell the suite.

What does she need to do in order to qualify the suite as her permanent