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To Flip or Not to Flip: That Is the Question

  • sasha540
  • Sep 29
  • 3 min read

Updated: Sep 30

Flipping houses — buying, renovating, and quickly reselling for profit — has long been viewed as an exciting way to make money in real estate. But while it may look simple on TV, the Canadian market comes with its own challenges, costs, and rules. Before diving in, it’s important to separate reality from misconception.


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Understanding the Basics


A house flip involves purchasing a property at a good price, making renovations or upgrades, and reselling it in a relatively short timeframe. In Canada, most flips take 4–6 months, depending on renovation scope, financing, and permits.


Unlike rental properties, flipping doesn’t provide steady cash flow or long-term equity growth. Instead, the goal is short-term profit — which depends heavily on buying smart, keeping renovation costs under control, and selling in the right market conditions.


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Profit Potential in Canada


While some U.S. studies show average returns around 25–27%, Canadian numbers are less consistent. In certain hot markets, investors have seen returns of 30–40%, but this is far from guaranteed.


Profit margins vary by location, purchase price, and how efficiently renovations are managed. With today’s higher borrowing costs and slower housing market, flippers face tighter margins than during the boom years of 2020–2021.


The Canadian Market Today


As of 2025, the housing market in Canada has cooled compared to the pandemic surge. Home sales have slowed in many regions, and price growth has moderated due to higher interest rates and affordability pressures.


Opportunities for distressed property purchases exist but are limited — Canada has a much lower foreclosure rate than the U.S. According to CMHC, mortgage delinquency rates rose slightly from 0.14% in 2022 to 0.19% in 2024, but overall remain low. This means undervalued deals are harder to find, making careful research more important than ever.


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Tax and Legal Realities


Flipping in Canada is not just about buying and selling — tax and regulation play a huge role:

  • Federal Flipping Rule (2023): Properties sold within 12 months are usually taxed as business income, not capital gains. That means profits are fully taxable, with no principal residence exemption (except for certain life events).

  • Provincial Rules: Starting Jan 2025, British Columbia began implementing a home-flipping tax of up to 20% on properties sold within a year, phasing out by the second year. Other provinces may follow.

  • Permits and Inspections: Renovations must follow local bylaws. Skipping permits or doing substandard work can reduce resale value and even result in penalties.


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Risks You Need to Consider

  • Market Fluctuations – A slowdown in sales or prices during your project can cut into profits.

  • Cost Overruns – Materials and labour in Canada are expensive, and renovation budgets often go over.

  • Carrying Costs – Every extra month of ownership means more mortgage payments, utilities, insurance, and property taxes.

  • Tax Exposure – Business income treatment can take a larger chunk of profit than expected.

  • Competition – More investors chasing the same deals makes undervalued properties harder to secure.


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Steps to Increase Success:


  1. Buy in the Right Area: Location remains the top factor — look for neighbourhoods with growth potential, amenities, and strong buyer demand.

  2. Budget Carefully: Factor in purchase price, renos, holding costs, and at least a 10–15% contingency for surprises.

  3. Renovate Smart: Focus on high-ROI areas — kitchens, bathrooms, and curb appeal improvements typically add the most value.

  4. Work with Experts: A reliable realtor, contractor, inspector, and lawyer can make or break a flip.

  5. Watch the Market: Don’t hold too long. Selling at the right time is key to maximizing profit.


Final Thoughts


Flipping houses in Canada can be profitable, but it’s not the quick and easy path often portrayed in media. With tighter lending conditions, higher costs, and stricter tax rules, flipping today requires careful planning and a business-like approach.


For those who treat it seriously — with research, discipline, and the right team — flipping can still be a rewarding real estate strategy. For those chasing easy money, it’s more likely to bring stress than success.


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I am a Victoria-based local realtor with eXp Realty. My commitment to honesty, integrity, loyalty, and hard work have been essential pillars for me because they drive a high standard of excellent service for my clients. Helping you realize your dream is my goal!


I service Vancouver Island, but my focus is on Victoria, Sooke, Saanich, Malahat, Shawnigan Lake, Cobble Hill, Duncan, and the rest of the Cowichan Valley.



 
 
 

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