Real Estate

Options of what can be done with a second home closing (new build).

  • Last Updated:
  • Sep 11th, 2021 10:50 pm
[OP]
Deal Addict
Feb 27, 2008
1367 posts
531 upvotes

Options of what can be done with a second home closing (new build).

Hello all -

Ontario here.

Question. I have a primary residence which I live in. I bought a new built which will be ready in 6 months. Plan is to sell my existing primary and move in to the second home and make it my primary.

What are my options in terms of legally what I can do or fees I may encounter if:

1) I decide to stay in my current home and sell the ew built immediately after closing, assuming I can get a second mortgage.

2) Rent out my current home and move in to my new home as primary.

Where is the whole concept of declaring a home primary or secondary/investment tracked or registered anyway?

Thanks,
4 replies
Deal Expert
User avatar
Feb 11, 2009
19028 posts
7264 upvotes
Toronto
Jon Lai wrote: Honour's system. You have to be able to justify the status of each property if you get audited.
Not really. Depends on which way he goes. If he’s changing his current home from primary to rental, he has a deemed disposition, which he has to report on his taxes. Needs to keep backup for how he came up to the disposition (fair market value) of the property in the event it gets reviewed/audited.

Selling the new home immediately may incur HST Rebate claw backs. And will result in the CRA assessing the disposition as active business income rather than Capital Gains. In either case a capital gains or active business income tax will need to be paid on the gains
Real Estate Agent, MAcc, CPA, CA
Deal Addict
User avatar
Apr 12, 2013
2323 posts
1152 upvotes
Moon
IF you pick number 2) Rent out my current home and move in to my new home as primary.

Make sure you reappraise your property then declare it as a rental on the day off. When you sell that property your Cap gains will be based off of the value of your home when you changed it from PPR to Rental.
Koodo, Public Mobile, Lucky Mobile Customer
Deal Expert
May 30, 2005
46077 posts
6567 upvotes
Richmond Hill
deal_with_singh wrote: Not really. Depends on which way he goes. If he’s changing his current home from primary to rental, he has a deemed disposition, which he has to report on his taxes. Needs to keep backup for how he came up to the disposition (fair market value) of the property in the event it gets reviewed/audited.

Selling the new home immediately may incur HST Rebate claw backs. And will result in the CRA assessing the disposition as active business income rather than Capital Gains. In either case a capital gains or active business income tax will need to be paid on the gains
Right, but I mean you don't "register" or "declare" it in any way, at least not explicitly.

Top