Canada Revenue Agency cracking down on condo sales
Selling a condominium too quickly could lead to a massive tax bill
The taxman is cracking down on Toronto’s hot condominium market, looking for so-called flippers who have bought and sold a condo quickly.
Flipping a condo is a business venture, according to the Canada Revenue Agency.
Since last April, the agency says its “condo project” has triggered 579 income tax audits, slightly more than half of which led to penalties for the taxpayers.
But one family says they’re being treated unfairly.
Dana Malczyk of Toronto says she tried to buy a condo for her mother so she could be closer to her family.
But by the time it was constructed three years later, her mom’s health had taken a turn for the worse. She instead moved into a retirement home, having never lived in the condo.
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The family sold it, made a profit, and almost two years later Malczyk was hit with an audit that could cost her thousands of dollars.
“It’s not a flip,” Malczyk told CBC News. “[My mother turned] 84 last week. She is not in the market to do real estate flips.”
Gains made on the sale of one's primary residence are tax exempt under CRA rules. But there are conditions a residence must meet to qualify — one of which is that the taxpayer, or the taxpayer's spouse or children, must have lived there "at some time during the year."
The Canada Revenue Agency would not comment on this specific case, but said in a statement to CBC News that it relies on a “number of factors” when considering whether to apply a penalty, including the number and frequency of transactions and the taxpayer’s experience and knowledge.
“This analysis would take into account the taxpayer's circumstances and stated motivation to sell,” the agency said.
From a report by Shannon Martin