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| *The Commerce Journal>>>Canada Taxes |
What is the minimum time I must live in my condo to avoid Capital Gains Tax? |
I just recently moved into a new development at the beginning of June. It is smaller than I expected and I would like to sell it and move somewhere else. The condo was assessed at $100,000 more than what I paid for it. How long do I have to live in the condo to avoid Capital Gains Tax? What is the minimum amount of time? You are allowed to claim a capital gain exemption with respect to your principle residence. According to interpretation bulletin IT-120R6 (http://www.cra-arc.gc.ca/e/pub/tp/it120r... to be your principle residence, the condo must be "ordinarily inhabited" in the year by you, your spouse or your child. Based on my experience, the CRA is very relaxed as to what is meant by ordinarily inhabited. As long as you have lived there for one day, the place qualifies. However, if you are involve in the real estate business (eg. real estate agent, real estate developer, etc.), you would be viewed with much more suspicion . Also, note that you can only designate one property per year to be your principle residence. Therefore, if you own multiple property, save the exemption for the property with the highest inherent capital gain. If you do decide to claim the exemption on the sale of your condo, file form T2091 together with your 2007 T1 personal tax return. If its your principle residence, then there is no CG tax to report upon disposition. "If the property was your principal residence for every year you owned it, you do not have to report the sale on your return. However, if at any time during the period you owned the property it was not your principal residence, you may have to report all or part of the capital gain." http://www.cra-arc.gc.ca/tax/individuals... and " 露 6. For a property to be a taxpayer's principal residence for a particular year, he or she must designate it as such for the year and no other property may have been so designated by the taxpayer for the year. Furthermore, no other property may have been designated as the principal residence of any member of the taxpayer's family unit for the year. " http://www.cra-arc.gc.ca/e/pub/tp/it120r... I understand your predicament, but you can't just flip properties or you could be considered a developer. As a general rule of thumb, I believe it's one or two years at the same location for it to be considered your primary residence and therefore it is not subject to Capital Gains, which are for investment or vacation properties. I've included the CRA website for you to browse. http://www.cra-arc.gc.ca/menu-e.html... |
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