The new rules on purchase-resale real estate transactions (flips real estate) announced Thursday by the federal government will not slow down professionals in the flipsay experts.
Posted at 7:00 a.m.
From 1er January 2023, gains on residential property purchased and resold within 12 months will be considered business income.
“In my daily life, it doesn’t impact me at all,” says real estate investor Mactar Mbaye, who has three projects underway, on the phone.
PHOTO PHILIPPE BOIVIN, THE PRESS
Mactar Mbaye, expert in flips real estate
We already work with a company and we have a contractor’s license from the RBQ [Régie du bâtiment du Québec].
Mactar Mbaye, expert in flips real estate
For five years, Mactar Mbaye and his business partner have been identifying and buying properties that need a huge dose of love. Whether it’s houses left as an inheritance and sold by the estate or others like the one located in the Outaouais region that has gone around the web.
The expert in flip was spotted by the Canadian television channel specializing in renovation HGTV Canada and will be part of the show Hoarder House Pinball Machines, airing from May 19. He would never encourage someone new to the buy-resell world to break all the rules.
“What I find super surprising about the new rules is that for professionals in the flip like me, these are things we already knew, supports Mactar Mbaye. the flipping, it’s a commercial activity, we are professionals, building contractors, real estate investors, so it’s commercial. »
It’s the intention that counts
It all depends on the intention, explains tax lawyer Richard D’Amour. If the intention of the purchase is to resell, the fruit of the sale will not be a capital gain, but rather a business income, he says.
According to the expert, even a property bought and resold after a simple paint job now becomes business income.
What Ottawa has just done with the new measure is to inform people who are not aware of this. But that doesn’t change what the law has provided so far.
Richard D’Amour, tax lawyer
“We’re like, ‘Oh! Think about it properly!” We are putting in place measures that already existed, but which are poorly known, ”says the lawyer.
RBQ license required
Canadians who make flips part-timers won’t be affected either, argues Yvan Cournoyer, president of the Quebec Real Estate Investors Club, speaker and author of the best-selling book The flips.
PHOTO FROM THE QUEBEC REAL ESTATE INVESTOR CLUB WEBSITE
Yvan Cournoyer, President of the Quebec Real Estate Investors Club
“Because you can’t do renovations and work in a house you don’t live in,” recalls the expert. It takes the RBQ contractor’s license. If you don’t have your licence, a partner who owns 50% of the company’s voting rights must absolutely have it. »
The new rules target Canadians who buy a property and resell it a few months later for a higher price to take advantage of rising prices. A trend that can unfairly lead to higher housing prices, says the federal government. While many declared a capital gain taxed only at 50%, this gain will be taxed next year at 100% as business income.
Exemptions may apply where people are forced to move due to death, disability, divorce, birth of a child or new employment.