Personal Finance

Tax Issues on Capital Loss - Change of Use, Rental Property

  • Last Updated:
  • Feb 23rd, 2016 3:32 pm
Deal Addict
Apr 27, 2010
3659 posts
1647 upvotes
Toronto

Tax Issues on Capital Loss - Change of Use, Rental Property

I am going to sell a condo in Toronto and have some tax issues. To make it simple, I just make up the numbers.

I bought the condo for $100K in 2005 and paid 1k on land tranfer tax and 1.2K on leagal fees. It was my principle residence until 2012 and then I moved out to a new house. I have rented the condo out since 2012 and will sell it soon.

In 2012, the market value for the condo was $150K and the net proceeds will probably be $140K when I sell it. Since this is not my PR from 2012, I will claim capital loss on the sale of the condo.

1. Adjusted cost base and land transfer tax

Now I need to calculate the adjusted cost base and here is the problem with land tranfer tax. Should I add 1k that I paid in 2005 or calculate hte tax based on the $150K value in 2012? Since CRA need to treat it as deemed disposition in 2012, I am not sure which year should be counted for land transfer tax.

I only have concern on land tranfer tax because it has changed a lot from 2005 to 2012. Not only the property value increased, but also the Toronto municipal land transfer tax was added in 2008. I will use the 1.2K legal fee from 2005.

2. Fair market value
Another issue is about the the market value in 2012. I am going to ask my listing agent to prepare a report to evalute the value, but what kind of report that CRA will accept? Is there a standard report?

So sad I need to worry about capital loss, but this is just the result of bad condo management.

Thanks in advance.
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