BUSINESS

Canada Revenue Agency Probing Pre-Construction Condo Flipping

The agency says it is putting more focus on real estate deals in Toronto and Vancouver.

10/24/2017 18:03 EDT | Updated 10/24/2017 18:04 EDT
Bloomberg via Getty Images
Condo towers along the shore of Lake Ontario in Toronto, Ont, Monday, Oct. 2, 2017. Canada Revenue Agency is analyzing 2,810 transactions involving cases of pre-construction condominium flipping in Toronto to determine whether audits need to be carried out to find tax evaders.

OTTAWA — Canada Revenue Agency is analyzing 2,810 transactions involving cases of pre-construction condominium flipping in Toronto to determine whether audits need to be carried out to find tax evaders.

In the Toronto area in particular, the federal government agency says audit work has increased substantially on what are called "assignment sales" or "shadow flipping" in which a condo is purchased from a developer and sold to another buyer before the unit is completed.

What's Going On In Housing?

Our weekly newsletter delivers the news and analysis you need on Canada's housing market. Sign up below and don't miss an issue.

The CRA says profits from flipping real estate are generally considered to be fully taxable as business income.

As of 2016, homeowners are required to report the sale of their principal residence on their tax return even if the gain is fully excluded by the principal residence exemption.

Watch: Canadian cities where you can afford a home on $50,000 a year

The agency says real estate deals in the Greater Toronto Area and Vancouver have been the subject of greater scrutiny, including audits.

It adds that it new technologies and faster computers are helping it to more effectively access, integrate and analyze data.

Also on HuffPost: