Real Estate

Change of mind on condo pre con

  • Last Updated:
  • Jul 2nd, 2020 8:27 pm
[OP]
Banned
Apr 7, 2019
94 posts
18 upvotes

Change of mind on condo pre con

Hi I wanted to ask I bought a condo in erin mills last year. Original plan was to move there with 2 kids and wife. It was 2 bedrooms. Unfortunately alot has changed. I lost my job due to covid 19 layed off and then been injured on top of that. My job involved alot of travel so condo location was fine. Now I lost job and wife got a job 20min north from where we live in brampton. So now no sense to move down south to erin mills. Wife job is bolton. Condo project is delayed.

I am deciding to move to another home right now in same area little north but not by much. If I sell my condo I know I will be in trouble for capital gains. I want to know would cra be understanding to my situation or they dont care about change of mind. Will I still get charged cap gains. How do I go about to not get charged cap gains if its even possible.
17 replies
Sr. Member
Jan 5, 2020
873 posts
1198 upvotes
If you have a capital gain, that is, you sell for more than you bought, you will have to pay tax on the capital gain.

The only way to get around the capital gains is to claim the condo as your principal residence. However, this will require you to keep the condo and live in it for a while and then put it up for sale.
Deal Addict
Nov 13, 2013
2922 posts
1623 upvotes
Ottawa
Well it could be worse if you never take possession they could call it business income so pay full taxes on the gain. OP, you really think after expenses you will make much money on this condo? Anyway paying taxes on profits is not the worst problem to have. Certainly the profit doesn't seem like it will be enough to justify moving and living there just to get the exemption. If you leave it empty and pretend to live there you will have the carrying costs and are committing fraud so there is that also.
Deal Expert
Feb 29, 2008
15991 posts
12725 upvotes
Tarrana & The Ri…
when Would you be selling the current condo and when would you buy the new one? I doubt you will have much of a profit
Deal Fanatic
Mar 15, 2005
5622 posts
1162 upvotes
liquidsuite wrote: Hi I wanted to ask I bought a condo in erin mills last year. Original plan was to move there with 2 kids and wife. It was 2 bedrooms. Unfortunately alot has changed. I lost my job due to covid 19 layed off and then been injured on top of that. My job involved alot of travel so condo location was fine. Now I lost job and wife got a job 20min north from where we live in brampton. So now no sense to move down south to erin mills. Wife job is bolton. Condo project is delayed.

I am deciding to move to another home right now in same area little north but not by much. If I sell my condo I know I will be in trouble for capital gains. I want to know would cra be understanding to my situation or they dont care about change of mind. Will I still get charged cap gains. How do I go about to not get charged cap gains if its even possible.
Capital gains can only work out as a net in your favor (meaning it was a profitable transaction).

Why are you so worried about making extra money?
Jr. Member
Apr 20, 2016
179 posts
141 upvotes
Newuserid wrote: If you have a capital gain, that is, you sell for more than you bought, you will have to pay tax on the capital gain.

The only way to get around the capital gains is to claim the condo as your principal residence. However, this will require you to keep the condo and live in it for a while and then put it up for sale.
It sounds like you should consult with a professional - i.e realtor/lawyer/accountant. You do have options...i.e. assign the unit if allowed at this point. There is no set rule from CRA, it depends on the set of circumstances and your history (i.e. do you have a history of buying/selling frequently etc.). If your gain is not that much and you just want to move on then as stated you don't have to worry too much about capital gain. However, there may be some HST implications...but not a huge deal if you aren't making much profit. As I said, consult with a professional as you may not get the right information here to make an informed decision.
Sr. Member
Oct 21, 2016
944 posts
717 upvotes
liquidsuite wrote: Hi I wanted to ask I bought a condo in erin mills last year. Original plan was to move there with 2 kids and wife. It was 2 bedrooms. Unfortunately alot has changed. I lost my job due to covid 19 layed off and then been injured on top of that. My job involved alot of travel so condo location was fine. Now I lost job and wife got a job 20min north from where we live in brampton. So now no sense to move down south to erin mills. Wife job is bolton. Condo project is delayed.

I am deciding to move to another home right now in same area little north but not by much. If I sell my condo I know I will be in trouble for capital gains. I want to know would cra be understanding to my situation or they dont care about change of mind. Will I still get charged cap gains. How do I go about to not get charged cap gains if its even possible.
You will have to sell it as an assignment then and will probably get much less for it due to a smaller pool of buyers and the current state of the market
Deal Expert
May 30, 2005
46638 posts
7082 upvotes
Richmond Hill
Ziggy007 wrote: Capital gains can only work out as a net in your favor (meaning it was a profitable transaction).

Why are you so worried about making extra money?
Many people don't understand capital gains, unfortunately. Nor progressive income taxes, and municipal taxes, for that matter.
Jr. Member
Nov 5, 2017
192 posts
162 upvotes
vprime77 wrote: It sounds like you should consult with a professional - i.e realtor/lawyer/accountant. You do have options...i.e. assign the unit if allowed at this point. There is no set rule from CRA, it depends on the set of circumstances and your history (i.e. do you have a history of buying/selling frequently etc.). If your gain is not that much and you just want to move on then as stated you don't have to worry too much about capital gain. However, there may be some HST implications...but not a huge deal if you aren't making much profit. As I said, consult with a professional as you may not get the right information here to make an informed decision.
Realtor = professional ie joke of the day for me
Deal Addict
Mar 3, 2018
2434 posts
2595 upvotes
GTA
If the OP documents this properly he may have a business loss to claim against his other income. CRA taxes assignment sales as business income/loss. With the current market and after expenses I would suggest the OP has a business loss.
[OP]
Banned
Apr 7, 2019
94 posts
18 upvotes
The condo will probably sell and make 100k-150k profit if sell next year. After all lawyers realotors fees maybe 100k cap gains. I have only had a principle home and moving again to another principal home. The condo I just will sell as was wrong decision and can not move there. I would also get my 100k deposit back if sell early. But i think that will also be taxed. So maybe get 200k out and can use toward next home downpayment but come tax time it might be big bill so would need to keep set amount set aside.
Sr. Member
Jul 15, 2019
656 posts
509 upvotes
You would have to assign the condo to someone else if it is still being built. Yes, you will pay capital gains tax on 50% of gain.

edit: to answer your above comment, no you don't have to pay tax on your deposit. You only have to pay cap gain tax on 50% of any gain on this investment.
Deal Addict
Jun 7, 2017
1043 posts
825 upvotes
BC
You won't be "in trouble" for cap gains tax if you sell. That would first require a gain, which is a good thing. If you don't take possession you may be levied the higher rate of income tax on the gain. Still requires a gain though, after expenses, and that is not a given.
Newbie
Aug 28, 2010
44 posts
6 upvotes
Toronto
freeman93 wrote: You would have to assign the condo to someone else if it is still being built. Yes, you will pay capital gains tax on 50% of gain.

edit: to answer your above comment, no you don't have to pay tax on your deposit. You only have to pay cap gain tax on 50% of any gain on this investment.
What are the tax implication on assignment sale, when the original intention was always to make it the primary residence, but for valid reasons (too many delays; work locations changed), you had to assign it? Any official reading materials on this you know of (particurly on that "50% of capital gain")? Is it something you can file taxes on on your own, or it's better to hire an accountant?
Sr. Member
Jul 15, 2019
656 posts
509 upvotes
totoromoro wrote: What are the tax implication on assignment sale, when the original intention was always to make it the primary residence, but for valid reasons (too many delays; work locations changed), you had to assign it? Any official reading materials on this you know of (particurly on that "50% of capital gain")? Is it something you can file taxes on on your own, or it's better to hire an accountant?
It doesn't matter if the original intention was to make it a primary residence, you have to meet the requirements of it being your principal resident to have that exemption. You've never lived in it, therefore it's not a primary residence.

You can file it on your own, however, there has been times where CRA has come after folks stating that the assignment was business income and not capital gains... as the intention was a flip. So it would be important to have evidence to prove that the plan was to live in it, however, circumstances came up requiring you to assign it.
Newbie
Aug 28, 2010
44 posts
6 upvotes
Toronto
freeman93 wrote: You can file it on your own, however, there has been times where CRA has come after folks stating that the assignment was business income and not capital gains... as the intention was a flip. So it would be important to have evidence to prove that the plan was to live in it, however, circumstances came up requiring you to assign it.
Thanks for the insight!
  1. So to confirm, if you have the evidences and can prove that situation has changed, then at max you'd get taxed at 50% of the capital gain (instead of 100% of capital gain as if it were a business income)?
  2. Do you happen to have any (online) references to file this particular type of claim on your own? I suppose I'm looking for the specific "how". Any help is appreciated!
Deal Addict
Jan 15, 2017
4548 posts
4189 upvotes
Ottawa
totoromoro wrote: Thanks for the insight!
  1. So to confirm, if you have the evidences and can prove that situation has changed, then at max you'd get taxed at 50% of the capital gain (instead of 100% of capital gain as if it were a business income)?
  2. Do you happen to have any (online) references to file this particular type of claim on your own? I suppose I'm looking for the specific "how". Any help is appreciated!
This may not be correct. If the CRA considers that the sell of the condo constitutes property flipping, the profits that you make are generally considered to be fully taxable as business income. Capital gains will not apply.

https://www.canada.ca/en/revenue-agency ... tions.html

The CRA is investigating property flipping in Canada very closely.

https://business.financialpost.com/pers ... -crackdown
Deal Addict
Aug 28, 2010
1266 posts
325 upvotes
Toronto
What is the big deal about paying capital gains? Its still money you made.... only 50% of the gain is taxed... its not a big deal. You will still make some money lol... (assuming you dont get rocked in agent fees)

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