Personal Finance

Principal Residence Divorce Issue

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  • Mar 5th, 2006 9:16 pm
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Newbie
Mar 2, 2006
85 posts
3 upvotes
Surrey, BC

Principal Residence Divorce Issue

My husband and I split up well over a year ago. We had, unfortunately, just purchased a condo a few months before and locked in for 5 years. The condo is in both our names. Anyways, I moved out into a small apartment and he stayed at the condo. We tentatively agreed that when the 5 year term was up we would sell and split the profit (he has since reneged but that's a whole other story). My question: When we sell, will I be dinged by the taxman because I no longer use it as my principal residence? ie. will my profit count as a capital gain? How about if I end up purchasing another property to live in while I'm waiting for the courts to decide who gets what?
BTW, I live in Quebec...

Thanks
12 replies
Deal Guru
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Feb 13, 2004
10602 posts
687 upvotes
Mississauga
Consider speaking to a lawyer. S/he will know how to proceed.
Newbie
Mar 2, 2006
85 posts
3 upvotes
Surrey, BC
I have retained a lawyer. I had so much to discuss I forgot that little bit. I will bring it up the next time we meet of course. I'm just seeing what I can find out before that date. There's no such thing as having too much information.
Deal Fanatic
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Aug 19, 2001
5171 posts
115 upvotes
Vancouver
You can declare only 1 principal residence per year.

There should be no problem with declaring this condo as your principal residence during those 5 years, if you do not declare any other property.

When you say "locked in" I assume you obtained a mortgage with a 5 year term. Nothing stops you (you = everyone on title) from selling the condo any time you wish aside from the mortgage pre-payment penalty.
Newbie
Mar 2, 2006
85 posts
3 upvotes
Surrey, BC
Thanks for the reply
grant wrote:When you say "locked in" I assume you obtained a mortgage with a 5 year term. Nothing stops you (you = everyone on title) from selling the condo any time you wish aside from the mortgage pre-payment penalty.
Unfortunately the ex stops me from selling. He has threatened to default on the payments should I try to get him to sell. He'd rather "stick it to me" and lose the condo to forclosure than walk away with the cash from the sale. Bitter, much? I put up the entire $50,000 down-payment so he knows it hurts me more to lose it than him. I give myself until the end of the term so that I can free up some room in case I have to take up the missed mortgage payments if he makes good on his threats.
Banned
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Dec 24, 2004
10708 posts
152 upvotes
donolo wrote:Thanks for the reply



Unfortunately the ex stops me from selling. He has threatened to default on the payments should I try to get him to sell. He'd rather "stick it to me" and lose the condo to forclosure than walk away with the cash from the sale. Bitter, much? I put up the entire $50,000 down-payment so he knows it hurts me more to lose it than him. I give myself until the end of the term so that I can free up some room in case I have to take up the missed mortgage payments if he makes good on his threats.
since you're divorced why can't you ask the court to force a sale of the matrimonial home and simply split half each which is normal? he can't stop the court from forcing a sale.
Deal Fanatic
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Feb 25, 2004
5655 posts
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New Westminster
donolo wrote:Thanks for the reply



Unfortunately the ex stops me from selling. He has threatened to default on the payments should I try to get him to sell. He'd rather "stick it to me" and lose the condo to forclosure than walk away with the cash from the sale. Bitter, much? I put up the entire $50,000 down-payment so he knows it hurts me more to lose it than him. I give myself until the end of the term so that I can free up some room in case I have to take up the missed mortgage payments if he makes good on his threats.
The end of the 5 year term isn't going to stop him from doing the same. The bank is expecting you to refinance (or pay it off entirely) either with them or via somebody else. When you get to the end of your term and you haven't done that and he walks ... default anyways.

as mentioned above, better to force the issue now.
Newbie
Mar 2, 2006
85 posts
3 upvotes
Surrey, BC
st7860 wrote:since you're divorced why can't you ask the court to force a sale of the matrimonial home and simply split half each which is normal? he can't stop the court from forcing a sale.
Sorry I didn't make it clear that we're not divorced yet. The result you mentioned is what I'm hoping for.
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Dec 24, 2004
10708 posts
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donolo wrote:Sorry I didn't make it clear that we're not divorced yet. The result you mentioned is what I'm hoping for.
well then. hmm. its been a year, so then you could simply file a petition for divorce. is there any chance of reconcilation? if not, then get a lawyer that you trust and go for it.

however, who makes more money? you or him? if he makes less than you, you might get nailed for support in court.
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Newbie
Mar 2, 2006
85 posts
3 upvotes
Surrey, BC
He makes a little more than me but since we were only married for a short time my lawyer (who's just waiting for me to give the go ahead) said that there would not be a support order either way.

I know I should file for divorce ASAP and stop procrastinating...it's just that I had so much debt that if he made good on his threats there would be little I could do about it. I'm starting to see the light at the end of the tunnel now and the wheels will be in motion shortly.

Thanks everyone.
Deal Addict
Jan 23, 2002
4274 posts
299 upvotes
Hamilton
You might be surprised at what a bank will give you if you talk to the right person. Perhaps you could consolidate your debt. Hell, maybe you could use the condo as colateral... ;)
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Dec 24, 2004
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synaptech wrote:You might be surprised at what a bank will give you if you talk to the right person. Perhaps you could consolidate your debt. Hell, maybe you could use the condo as colateral... ;)
Yes! But if you use the condo as formal collateral, often the bank will ask for both signatures of owners on the condo.

however, if you simply apply for an ordinary loan and say you own a house on the application, that might help, and they won't ask for two signatures all the time.
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Deal Fanatic
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Aug 19, 2001
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Vancouver
donolo wrote:Unfortunately the ex stops me from selling. He has threatened to default on the payments should I try to get him to sell. He'd rather "stick it to me" and lose the condo to forclosure than walk away with the cash from the sale.
Once you are in a legal position to force the sale, do so.

The bank cannot forclose any faster than you could sell the condo anyways.

Just speak to the bank, explain that you cannot afford the payments any more, and you are IMMEDIATELY listing the condo for sale to satisfy the mortgage. Almost certainly they will work with you to help... and if if they are uncooperative, there is not really anything they can do to stop it, especially in today's market where well-priced properties sell so fast.

(btw yes he sounds bitter, it's a shame you married a man like that).

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