The Canada Revenue Agency could have an unwelcome surprise in store for Canadian condo investors if they don’t sell their holdings fast enough, reports Canadian Real Estate Wealth.
The agency is undertaking a special ‘condo project’ in order to investigate transactions. Launched in April 2013, the project has resulted in almost 600 income tax audits. Nearly half of those audited received penalties.
“If you buy a new condo from a builder and flip it shortly after closing, firstly you may have to repay the HST rebate portion of the purchase price because you did not move in or rent it out,” real estate lawyer and lecturer Mark Weisleder said in an interview.
“This can be close to $30,000 in some cases,” he continues. “In addition, if you sell shortly after closing, CRA considers this business income and not a capital gain, so you will be expected to pay tax on the full amount of any profit made.”
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