*The Commerce Journal>>>Canada Taxes

I am going to be selling my house and moving into a rental house. What kind of taxes will I have to pay?

Ok, so I live in Canada and I have $175,000 left on my mortgage and my house will probably sell for $225,000 leaving me with $50,000. I will not be using this money right away, it will be saved for a downpayment in probably about 4-5 years. I have lived in the house for 3 years, cannot afford the mortgage payment anymore, so I will be renting out a place until I am finished school. I was just wondering how the government would tax the $50,000 that I receive, and if they do, how can I reduce the tax taken off the most.

First the $50,000 is the difference between what you owe and what the house is expected to sell for. You would never get taxed on that amount. If CRA was going to tax you it would be based on the capital gains (the difference between what you paid for the house 3 years ago and what it will sells for now.

Good news though. In Canada we do not have to pay tax on our primary residence. So CRA will not tax you. So the answer is $0

The sale of your princinpal residence is tax free. Please note that your tax free gain may not be $50,000 because the gain is calculated from the selling price LESS the cost of your house (not your current mortgage of $175,000)

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