Do You Have to Pay Income Tax on Selling a House - tax free in Canada if personal residence - up to $250,000 tax free in the US.

Do you have to pay income tax on selling a house?  Would you consider giving me a hand or at least some advice based on your experience?
Would you consider giving me a couple pointers?
I really appreciate your help.
Gratefully,

If the house is your principal (personal)  residence in Canada and you are a Canadian resident of any nationality, there is no tax to pay on the sale of your house.

If you are an American citizen anywhere in the world including Canada, France, Australia, etc., , up to $250,000 US per person is tax free providing you lived in the house for 2 out of the last five years.  If you did not live in it for 2 years and sold because of a  job loss,  divorce, medical emergency or job change, the $250,000 tax free is pro-rated by 24 months.  i.e. if you lived in it for  12 months, $125,000 per owner/resident can be tax free,

If it is a rental house, it is taxable in most places including the United States, Canada and Mexico unless it 'was' your principal residence and you lived in it for 2 of the last three years for US purposes and /or for up to 5 years of rental in Canada if you made an election to treat it as your principal residence even though you did not live in it under Section 45(2) of the Canadian Income Tax Act.



>>
>> QUESTION:
>>
>> Hi, 
>>
>> Last year, we rented out our condo in Vancouver.  The
>> plan then was to have the rent cover our mortgage
>> payments for the 12 months that we would be away.  A
>> short term solution.
>>
>> Now, we are planning to be away from BC for a longer
>> period of time (approx. 2 years) and wish to sell the condo
>> in the middle of the year, as we are unable to rent the
>> condo for any longer due to strata council by laws.
>>
>> 1) If we sell the condo when there has been a tenant living
>> in it for 12 months, will we pay capital gains?
>>
>> 2) What are our best options to avoid paying this tax?
>>
>> 3) If capital gains would be owed, for how long would we
>> have to make the unit our principal residence again before
>> we can sell it and not pay GST?
>>  
>> Thank you,
 _________________________________________________________________
   
david ingram replies:
 
If you filed a section 45(2) election with your first year's rental, you 
can rent the condo out for up to 4 years (plus 1 in the calculation) 
without incurring capital gains tax if you have not bought another 
residence that you are living in.
 See Below: