Real Estate

Capital Gain on Pre-Construction Property

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  • Aug 19th, 2021 6:50 pm
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[OP]
Member
Jul 31, 2018
396 posts
196 upvotes

Capital Gain on Pre-Construction Property

Purchased a condo for $450k, upon closing the appraisal is $650k. Rented for 5 years and sold it for $900k.

Is my capital gain $900k - $450k = $450k?
Or should it be from my appraisal upon closing $900k - $650k = $250k?

Thanks
full time realtor + medical professional
2 replies
Deal Addict
Mar 3, 2018
3017 posts
3381 upvotes
GTA
$450k but that can be reduced by fees like legal and realtor, capital improvements and other selling expenses.
Deal Fanatic
Nov 24, 2013
6257 posts
3011 upvotes
Kingston, ON
Your cost basis nominally should be what you actually paid for it. That being said, had you bought it to live in it and ~then~ after living in it decided to rent it out, your basis would have been the fair (appraised) value at the time of change in use.

It doesn’t sound like that was the case in your scenario but I can see some grey areas in a situation like this, especially if you did not have a(nother) principal residence at the time. If any of your initial financing paperwork listed purpose of funds as investment property rather than personal residence though you’d be f-ed trying to claim that though.

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