Sell strategy & Tax Implications
This is the Scenario, a friend of mine currently has a rental property and a principal residence. The rental property is
a detached house is a small town in Ontario. Principal residence is a Condo in Toronto.
He is now considering selling both to move to a bigger house in the GTA. (Although selling just rental should give him enough for downpayment and mortgage room)
Rental Property has gone up 180k in value since purchase 4yrs ago while primary Condo has gone up 280k since purchase during the same period.
Given the current Condo sales cool off and duration of other units unsold in his condo building vs higher demand for detached rentals,
the more likely scenario is that the rental proper will sell first before the detached property.
In this scenario, how does the cap gains work, would he have to pay capital gains on the rental property and again when the condo sells?
1. Sequence: Does the sequence of events affect tax implications?i.e.
a) Sell Rental, Buy New Principal Residence, Sell Condo vs
b) Sell Rental, Sell Condo, Buy new Residence
2. Timing: In terms of taxation year i would assume it would be better to sell rental in 2020 and condo in 2021, rather than both in same year?
I have asked him to talk to his accountant but would like to hear your thoughts on what a good sell strategy would be.
a detached house is a small town in Ontario. Principal residence is a Condo in Toronto.
He is now considering selling both to move to a bigger house in the GTA. (Although selling just rental should give him enough for downpayment and mortgage room)
Rental Property has gone up 180k in value since purchase 4yrs ago while primary Condo has gone up 280k since purchase during the same period.
Given the current Condo sales cool off and duration of other units unsold in his condo building vs higher demand for detached rentals,
the more likely scenario is that the rental proper will sell first before the detached property.
In this scenario, how does the cap gains work, would he have to pay capital gains on the rental property and again when the condo sells?
1. Sequence: Does the sequence of events affect tax implications?i.e.
a) Sell Rental, Buy New Principal Residence, Sell Condo vs
b) Sell Rental, Sell Condo, Buy new Residence
2. Timing: In terms of taxation year i would assume it would be better to sell rental in 2020 and condo in 2021, rather than both in same year?
I have asked him to talk to his accountant but would like to hear your thoughts on what a good sell strategy would be.
