Personal Finance

tax question: capital gains on eventual house sale?

  • Last Updated:
  • Apr 21st, 2017 11:40 am
[OP]
Sr. Member
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Jan 9, 2010
655 posts
21 upvotes

tax question: capital gains on eventual house sale?

Hi, quick tax question.

From 2007 until October 2015, my wife and I lived in a condo in Nova Scotia that was our principal residence. We then moved to Alberta, lived in my sister-in-law's condo for six months, then bought our own house in Alberta in March 2016. We have been trying to sell our Nova Scotia condo since October 2015, with no luck so far--the RE market is horrible in Nova Scotia. We aren't renting out the NS condo; it's just dormant waiting for a sale.

For our 2016 taxes due this month, do we have to report a "change in status" of our NS condo from "principal residence" to "non-principal residence" (or whatever the tax term for that is)? And when we eventually do manage to sell our condo, will we get dinged with capital gains tax on the sale proceeds?
5 replies
Member
Nov 13, 2013
296 posts
97 upvotes
You should be ok. You get to value it in 2015 and pay capital gains on any gain since then minus expenses. In other words the first 5-6 % of gains will be offset by real estate and legal fees. It sounds like it hasn't gone up much if at all. You need to sell it for what it's worth which is obviously a lot lower than your current asking price.
[OP]
Sr. Member
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Jan 9, 2010
655 posts
21 upvotes
Right, I get that, thanks. My main question is, do I need to report to CRA (for 2016 tax purposes) that the condo is "no longer my principal residence"?
Member
Aug 17, 2008
398 posts
149 upvotes
Quebec
canadave wrote:
Apr 21st, 2017 10:02 am
Hi, quick tax question.

From 2007 until October 2015, my wife and I lived in a condo in Nova Scotia that was our principal residence. We then moved to Alberta, lived in my sister-in-law's condo for six months, then bought our own house in Alberta in March 2016. We have been trying to sell our Nova Scotia condo since October 2015, with no luck so far--the RE market is horrible in Nova Scotia. We aren't renting out the NS condo; it's just dormant waiting for a sale.

For our 2016 taxes due this month, do we have to report a "change in status" of our NS condo from "principal residence" to "non-principal residence" (or whatever the tax term for that is)? And when we eventually do manage to sell our condo, will we get dinged with capital gains tax on the sale proceeds?


Change in status is only when you go from a principal to a rental property so there is no status change in your case.

CRA gave 1 'free year' when you sell a principal residence. So lets say you sell in 2017. You can declare it as a principal residence for 2007 to 2016. With the free year you cover all the years so no capital gain.
Same for the Alberta house, 2017 to 20xx, with the free year you cover all the years you owned the house.
[OP]
Sr. Member
User avatar
Jan 9, 2010
655 posts
21 upvotes
sr79 wrote:
Apr 21st, 2017 10:25 am
Change in status is only when you go from a principal to a rental property so there is no status change in your case.

CRA gave 1 'free year' when you sell a principal residence. So lets say you sell in 2017. You can declare it as a principal residence for 2007 to 2016. With the free year you cover all the years so no capital gain.
Same for the Alberta house, 2017 to 20xx, with the free year you cover all the years you owned the house.
Oh okay. Is that the case even though when we sell it, it will have been more than one "calendar year" since it was no longer our principal residence? In other words, from March 2016 until, let's say, June 2017, when we hopefully sell the house, that's more than one calendar year. However, from a "tax year" perspective, are we saying we could argue that the NS condo was our "principal residence" for part of "tax year" 2016 (January to March), and that we disposed of it in tax year 2017, so thus since it's within one "tax year", we don't owe capital gains?
Member
Aug 17, 2008
398 posts
149 upvotes
Quebec
From a tax perspective its still a 'principal residence', you currently have 2 'principal residence'.
When you sell 1 you have to declare years you designate it as a 'principal residence'. you cant declare the same year twice. So as i said if you sell in 2017, you can declare years 2007-2016, with the +1 year rule you will have no capital gain because you cover all the years you owned the residence
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