How to Calculate Fix-and-Flip Profit in Canada: ARV, the 70% Rule and Break-Even Price

Fix-and-flip profit is the price you sell for minus everything the project cost you, from the day you make an offer to the day the sale closes. The expected sale price is the after-repair value (ARV): what the property should sell for once the work is done, based on recent sales of similar renovated homes nearby.

Profit = Sale price − All-in cost

All-in cost has six parts:

1. Purchase price.
2. Closing costs: land transfer tax, legal fees, title insurance, inspection.
3. Renovation, including a contingency for surprises.
4. Financing: interest, lender and broker fees.
5. Holding costs: property tax, insurance and utilities while you own it.
6. Selling costs: real estate commission plus HST, legal fees, staging.

Most flips that lose money do so because one of these was left out or underestimated, not because the renovation was wrong.

Land transfer tax, commission with HST, and financing are the costs that most often surprise new flippers in Canada, because they scale with price. Land transfer tax is charged on every purchase and is not refunded when you sell. On a $560,000 house:

Ontario charges 0.5% up to $55,000, 1% to $250,000, 1.5% to $400,000 and 2% to $2 million. Toronto adds a municipal tax at the same rates up to $3 million. British Columbia charges 1% on the first $200,000 and 2% up to $2 million.

Commission is negotiable, but 4% of the sale price is a reasonable planning figure, and in Ontario HST adds 13% on top of the commission. Flips are often financed by private lenders at interest-only rates of around 8–10% plus a 1–2% fee, because a standard bank mortgage is not built for a short renovate-and-sell project.

An investor buys a dated detached house outside Toronto for $560,000, plans an $80,000 renovation (contingency included) and expects to sell for $760,000 six months later. A private lender funds 75% of the price at 9% interest-only with a 2% fee.

A $200,000 gap between purchase and sale price shrinks to $37,673, or 5% of the sale price. Costs beyond the price and renovation total $82,327, almost 11% of the sale price. The investor’s own cash in the deal is $263,975.

The 70% rule says the most you should pay for a flip is 70% of the after-repair value minus the renovation cost. The remaining 30% of ARV is meant to cover closing, financing, holding and selling costs plus your profit.

Maximum offer = (ARV × 70%) − Renovation cost

For our house, that is $760,000 × 70% − $80,000 = $452,000, which is $108,000 below what the investor paid. At $452,000, the same project would earn about $153,000, roughly 20% of the sale price.

The rule is a useful first screen, but it has limits in Canada:

• Few listings pass it in high-priced markets, so investors are tempted to bend it to 75% or 80%, where margins become thin.
• It ignores time. A 70% deal that takes a year can earn less per year than a tighter deal done in four months.
• It ignores tax. Flip profits are usually fully taxable as business income, so the profit left in the 30% shrinks after tax.

Use the 70% rule to decide which deals deserve a full calculation, never instead of one.

The break-even sale price is the lowest price at which the sale returns every dollar you spent, leaving zero profit. Because commission rises with the price, you cannot just add up the costs; divide the costs that don’t depend on the sale price by what is left after commission.

Break-even price = Fixed costs ÷ (1 − Commission rate including HST)

In the example, costs before the sale are $683,975, plus $4,000 of legal and staging. Commission of 4% plus 13% HST is 4.52% of the price. $687,975 ÷ 0.9548 = $720,544.

That is only 5.2% below the expected ARV. If the house sells 5% below $760,000, profit drops from $37,673 to about $1,400. Comparing the break-even price with recent sales tells you how much room for error you really have. A good flip has a break-even price comfortably below the lowest realistic sale price, not just the expected one.

Divide profit by the cash you invested to get your return on cash, then annualize it to compare flips of different lengths with each other and with a rental. Cash invested is the down payment plus every cost paid out of pocket before the sale.

Annualized return = (1 + Profit ÷ Cash invested)^(12 ÷ Months held) − 1

In the example, $37,673 ÷ $263,975 = 14.3% in six months, which annualizes to about 30.6%. Delays are the main risk to that figure. If permits, trades or a slow sale stretch the project to 10 months, four more months of interest and carrying costs ($16,600) cut profit to $21,073. Return on cash falls to 7.5% and the annualized return to about 9%.

Every month of holding in this example costs $4,150. Knowing your monthly burn helps you decide when to cut the price rather than wait for a buyer.

Profit from buying, renovating and quickly reselling a home is generally business income, which is fully taxable, not a capital gain. This is a high-level overview, not tax advice; speak to an accountant before you buy.

• The 365-day rule. Since January 1, 2023, a home in Canada owned for less than 365 consecutive days is a “flipped property”: any gain is business income and the principal residence exemption does not apply, and a loss is deemed to be nil. Exceptions cover life events such as death, separation, job loss, a work-related move, serious illness and insolvency.
• After 365 days, the CRA still decides on the facts. Buying a property to renovate and resell often looks like a business however long you hold it.
• British Columbia has charged a separate home flipping tax since January 1, 2025: up to 20% of the taxable profit on properties sold within 730 days, on top of income tax.
• GST/HST can apply to the sale if the renovation is a “substantial renovation,” roughly 90% or more of the interior removed or replaced.

At a 43% marginal rate, the example’s $37,673 becomes about $21,500 after income tax.

PropStack’s Flip strategy takes your ARV or target sale price, renovation scope, holding period, holding costs and selling costs, and calculates net profit, return on cash, annualized return and the break-even sale price automatically. Changing the timeline or sale price updates every figure, so you can see how much a delay or a lower sale costs before it happens.

The same deal is also analysed as a rental and as a cash-out refinance, so you can see whether refinancing and holding beats selling. See buy and hold vs. BRRRR vs. flip for how to choose. Try it on a listing, no account needed.