Fix and Flip Calculator Canada

The 365-day rule, and what it actually removes

Under the CRA's property flipping rule, a property is "flipped property" if it was owned by the taxpayer for less than 365 consecutive days prior to disposition. Where the rule applies, the gain is deemed fully taxable as business income for transactions occurring on or after January 1, 2023 — there is no capital gains treatment and no principal residence exemption available on that gain, regardless of how the property was actually used. The rule also covers assignment sales of the right to purchase a housing unit, not just completed dispositions of a finished property.

A gain taxed as a capital gain currently keeps a one-half inclusion rate — the previously proposed increase to two-thirds on gains above C$250,000/year was cancelled — so only half the gain is added to taxable income. Business income has no such discount: the entire profit is added to your income and taxed at your full marginal rate. On a project that clears 365 days and is genuinely taxed as a capital gain, that inclusion-rate difference alone changes what the deal nets you; on a flip caught by the 365-day rule, that better outcome simply isn't available.

The exceptions — and what's not on the list

CRA's own life-event exceptions remove the automatic deeming and send the transaction back to a facts-and-circumstances test of business income vs. capital gain. Per the CRA's property flipping rule page, those exceptions are: death of the taxpayer or a related person; a household addition or a related person's death; breakdown of marriage or common-law partnership where the taxpayer has lived separate and apart from their spouse or partner for at least 90 days before disposition; a threat to personal safety; serious disability or illness; an eligible relocation for work or education; involuntary termination of employment; insolvency; and destruction or expropriation of the property.

Notice what isn't on that list: an unplanned market downturn, a project that ran long for ordinary construction reasons, or simply deciding the flip is a genuine improvement rather than speculation. None of those are recognized exceptions. If your project is going to land under 365 days for reasons other than the specific list above, plan the tax outcome as business income from the outset rather than hoping for a facts-and-circumstances exception that doesn't apply to your situation.

If the property earned rent before the sale

Some flip projects place a tenant during a slow renovation or a stalled sale. If you claimed capital cost allowance on the building while it was a rental, CRA's rental income guide requires a recapture of that CCA added back to income on disposal if the proceeds exceed the building's remaining undepreciated capital cost — a separate mechanism from the flipping rule itself, and one that applies whether or not the 365-day rule also catches the sale. And if you're reporting a genuine capital gain on a property you also lived in for part of the ownership period, CRA's principal residence reporting rule requires the disposition and designation to be reported on Schedule 3 and Form T2091(IND) — since 2016, CRA only allows the exemption when that reporting is filed, and the flipping rule removes access to the exemption entirely for any period the property counts as flipped property.

Rehab-budget context: construction costs are still rising

The 70% rule's rehab-cost input is only as good as the estimate behind it, and input costs have kept moving. Statistics Canada's Q2 2026 building construction price index shows residential construction costs up 0.5% nationally for the quarter, with wide city variation — Québec City +2.6%, Montréal +2.5%, Halifax +2.1%, Calgary -0.1%, Vancouver -0.2%, and Toronto -0.8%. This is an input-cost index, not a dollar-per-square-foot renovation estimate, but a rehab budget built from contractor quotes obtained several months before your close is worth re-checking against how much input costs have moved in your city since those quotes were given.