Real Estate

tax implications of holding..

  • Last Updated:
  • Aug 9th, 2017 4:41 pm
[OP]
Banned
Jun 19, 2017
256 posts
180 upvotes

tax implications of holding..

Hey Guys,
My house is for sale right now and I'm moving At the beginning of september.

If the house doesn't sell, does anyone know the tax implications of me holding onto the house until March WITHOUT renting it?
Do I pay capital gain even if I'm not generating income on it? Is there a time span that you can be in the process of selling the house
before it becomes a capital gain?
4 replies
Deal Addict
Feb 5, 2009
2808 posts
939 upvotes
Newmarket
There wouldn't be any tax consequences.
In practice most of us who buy and sell would own two properties at the same time, and in most cases you would reside in your new residence by the time you have closed on the old one, in some cases it would be couple of days, in others couple of months, and I have never heard of any cases where anyone was faced with tax consequences. Don't know if cra has implemented time limit in such cases.
For cra the proving the intent is a major factor, if your intention was not holding on to an empty property but selling it around the time of the move I don't see any issue. If you wanted to get technical you could argue that there is a possibility of a difference between deemed disposition (when you change the residency), or fair market value at the time of the move, and actual selling price 6 months later. Most would simply declare the sale when it happens.
Deal Expert
User avatar
Jul 30, 2007
32080 posts
19297 upvotes
Toronto
just in case ... if CRA has questions to ask ...

Keep all your docs in order, with the current house listing for sale, who is your agent/broker, date of listing, pics of your house (if necessary for filing). This is just to prove your principal residence is up for sale and you have bought and moved into your next new principal residence
Member
Jun 12, 2017
373 posts
377 upvotes
Your gains stay tax free upto a year after you move:
https://www.canada.ca/en/revenue-agency ... tml#N103EF
2.20 The first amount by which the taxpayer’s gain otherwise determined is reduced under paragraph 40(2)(b) is calculated by using the following formula:

A × (B ÷ C)

The variables in the above formula are as follows:

A is the taxpayer’s gain otherwise determined, as described above.

B is 1 + the number of tax years ending after the acquisition date for which the property was the taxpayer’s principal residence and during which he or she was resident in Canada. (Note that both these conditions must be satisfied for a particular year in order for that year to qualify for inclusion in variable B.)

C is the number of tax years ending after the acquisition date during which the taxpayer owned the property (whether jointly with another person or otherwise – see ¶2.9).

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