Suppose you buy a house for $700,000, spend $90,000 on renovation and sell for $950,000 six months later. After loan costs, holding costs and 5% selling costs, the profit before tax is $50,600. With $90,000 of other income, tax takes about $19,083, which leaves $31,517 on $291,900 of your own cash.
How a flip makes money
A flip works when the sale price beats the total cost by enough to cover the risk. Costs reach well past the price and the renovation. Interest, fees, taxes, insurance, utilities and selling costs all take a bite. One small gap in the numbers can wipe out the profit.
Buying costs
The calculator adds a share of the price for land transfer tax, legal fees and inspection. In Toronto, land transfer tax alone can top 3% of the price. For the exact amount, use the Toronto land transfer tax calculator or the closing costs calculator.
Financing
Short-term loans for flips often come with higher rates and a lender fee. The calculator charges interest for the months you hold the loan and adds the fee as a percentage of the loan. Two months of delay mean extra interest and extra carrying costs.
Holding costs and permits
While you renovate, property tax, insurance and utilities keep coming. Enter the monthly total. Every month counts. A project that runs long can lose thousands to these costs alone, so build a buffer into the schedule.
Renovations often need permits, and work done without them can block a sale. Budget for inspections and for delays while the City reviews plans. In Toronto, permit timelines can add weeks. Hiring a contractor who commits to a firm schedule helps protect your numbers when the calendar starts to slip.
Selling costs
Agent commission, HST on the commission and legal fees come to about 5% of the sale price in this example. On a $950,000 sale, that is $47,500. The real estate commission calculator shows the split.
Tax on a flip
In Canada, a residential property sold within 365 days of purchase is treated as business income, and the full profit is taxable. Narrow exceptions exist, such as a death or a divorce. The calculator taxes the whole profit at your rate. Longer holds can qualify for capital gains rules, so ask an accountant.
The 70% rule
Many flippers use a shortcut: pay no more than 70% of the sale price minus repairs. On these numbers the highest offer is $575,000. It is a screen. Not a guarantee. The calculator also shows the sale price that reaches break-even.
A tighter case
Try a $900,000 sale price and stretch the project to nine months. The result turns into a loss of about $14,900 after tax, once loan interest and carrying costs grow. Run cautious cases before you make an offer. Keep cash in reserve.
Reading the result
The big number is profit after tax. Below it sit the parts: purchase and renovation, buying costs, interest, carrying costs and selling costs. Find the largest item and ask whether it can shrink. Check the return on your cash as well, because a small profit on a large outlay is weak.
Where to go next
Estimate the seller’s costs in the home sale net proceeds calculator. The capital gains tax calculator covers the tax rules, and the ROI calculator compares returns.
Frequently asked questions
How do I calculate profit on a flip?
Sale price minus selling costs minus the total cost of buying, renovating, financing and holding.
Is flipping income taxable in Canada?
Yes. A home sold within 365 days is business income.
What is the 70% rule?
Pay at most 70% of the sale price minus repair costs.
What costs do beginners forget?
Interest, holding costs, land transfer tax and selling costs.
How long should I plan for?
Add a buffer of one to two months to your schedule.
Does the calculator include HST?
Only on selling costs through the percentage you enter.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.