Real Estate

Cap gains tax question

  • Last Updated:
  • Sep 8th, 2021 1:22 pm
[OP]
Sr. Member
Apr 26, 2007
691 posts
88 upvotes

Cap gains tax question

I had a rental property that i sold this year. I lived several years in it before. I never got an appraisal done when i changed it from residence to income producing. I want to use the FMV from the time the use was changed. What can I use if I didnt get an appraisal done at that time?
Thank my post if it helped!
15 replies
Sr. Member
Mar 10, 2014
639 posts
516 upvotes
Contact a reputable accountant who has a good background in real estate dealings.
Deal Addict
Jan 17, 2006
2231 posts
2355 upvotes
Toronto
jmc111 wrote: Contact a reputable accountant who has a good background in real estate dealings.
"Contact someone who knows" types of answers are very helpful when someone asks for advice.
Sr. Member
Mar 10, 2014
639 posts
516 upvotes
ilim wrote: "Contact someone who knows" types of answers are very helpful when someone asks for advice.
For a question like this, it can be tricky to answer since he is must deal with CRA. The best advice is coming from a professional who has dealt in these types of situations directly with CRA. We don't know all the details and timelines of the situation.
Deal Guru
User avatar
Mar 23, 2008
12658 posts
9262 upvotes
Edmonton
ilim wrote: "Contact someone who knows" types of answers are very helpful when someone asks for advice.
It’s the only right answer. Nobody here can tell him the FMV of the home.

C
Jr. Member
Dec 3, 2019
172 posts
87 upvotes
Many years ago CRA did allow to use the proportionate method to be used so you would just claim the amount of time the place was a rental for capital gains. Not sure if you can apply that to your property.
Deal Addict
Mar 3, 2018
2244 posts
2281 upvotes
GTA
If the OP does not have another property that is owned and their current principal residence there is a tax election that can be used to reduce or eliminate capital gains tax on the rental.

Otherwise a FMV will need to be determined for when the use changed to rental. You could use comparable sales at that time to determine the value yourself. I wouldn't spend money on an appraisal unless my FMV was challenged by CRA.
Deal Addict
Jun 7, 2017
1017 posts
791 upvotes
BC
DaveTheDude wrote: If the OP does not have another property that is owned and their current principal residence there is a tax election that can be used to reduce or eliminate capital gains tax on the rental.

Otherwise a FMV will need to be determined for when the use changed to rental. You could use comparable sales at that time to determine the value yourself. I wouldn't spend money on an appraisal unless my FMV was challenged by CRA.
OP, do not listen to this. Consult an accountant.
Deal Addict
Mar 3, 2018
2244 posts
2281 upvotes
GTA
Furcorn wrote: OP, do not listen to this. Consult an accountant.
When someone has nothing of value to offer to the conversation they usually go with this bozo answer.
Deal Guru
User avatar
Sep 14, 2003
10687 posts
608 upvotes
Mississauga
The correct answer is as listed: talk to a professional.

The opinion answer: you should be able to prove when you stopped using it as a primary residence, and at that time there should be records of similar properties selling at X amount. I think a reasonable case can be made to determine FMV and prove the delta.
4chan melts your brain.
Sr. Member
User avatar
Jul 30, 2013
687 posts
517 upvotes
GTA
The answer to any tax question is, it depends.

Did you have another principal residence after the time you "changed it from residence to income producing"?
Was a tax election filed at that time of change in use, i.e., S. 45(2) Election - Defer Capital Gain Until Property Sold?
How long/how many years has it been since the change in use?

In terms of appraisals, it would be best practice to get it done by a professional.
They would likely be able to do one after the fact based on historical comparable sales.

Without complete information, nobody can give you a complete response to your question.
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Sr. Member
May 12, 2003
839 posts
266 upvotes
THIS...listen to THIS!
DaveTheDude wrote: If the OP does not have another property that is owned and their current principal residence there is a tax election that can be used to reduce or eliminate capital gains tax on the rental.

Otherwise a FMV will need to be determined for when the use changed to rental. You could use comparable sales at that time to determine the value yourself. I wouldn't spend money on an appraisal unless my FMV was challenged by CRA.
Deal Addict
Jan 17, 2006
2231 posts
2355 upvotes
Toronto
CNeufeld wrote: It’s the only right answer. Nobody here can tell him the FMV of the home.

C
As you can see many opinions are given and it could be enough to educate yourself before going to a professional, which may happen to be less educated than some of the members in the forum.
Some of those members could be accountants and CRA workers, so many times in life internet, forums helped me to solve the issue or educate in some topics without going to a consultation with a so-called field expert.
So no, I don't agree that It is the correct answer to just direct to professional when the question is asked in the forum.

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