If I buy and quickly flip a house in Ontario, is the profit a capital gain or income?

If you buy a property and sell it quickly at a profit — commonly called "house flipping" — there is a strong likelihood that the CRA will characterize the profit as fully taxable business income rather than a capital gain. The distinction matters enormously: business income is 100% taxable at your marginal rate, while only the included fraction of a capital gain is included in income.

The federal government introduced specific "residential property flipping rules" (effective for properties sold on or after January 1, 2023). Under these rules, a gain from selling a residential property that you owned for less than 365 consecutive days is automatically deemed to be fully taxable business income, not a capital gain — and therefore not eligible for the principal residence exemption. Certain exceptions apply: death, divorce, job relocation, disability, or other qualifying "life events" can exempt a short-term sale from these rules.

For properties held longer than 365 days, the earlier facts-based test continues to apply — the CRA examines your intention at the time of purchase, the nature of your activities, and how many transactions you have completed. Regular flippers are considered to be in the business of real estate regardless of the holding period.