selling a pre-built purchase and sale of condo -

My question is: Canadian-specific
QUESTION: We bought a pre-sale downtown vancouver condo 3 years ago with the
intent to move in when the unit was completed. Since then, we had a baby and
moving in simply will not work as it is only a one bedroom+den. We have
decided to stay where we are, but have sold the condo as it would have been
a burden even with the rents we could probably get. It was never rented. Is
this property subject to capital gain tax?
---------------------------------------------------------------------------
david ingram replies:
>From what you have said, the unit would be subject to Capital Gains tax.
You will have to be able to prove that you "were" going to move into it.  If
you can NOT prove it, the property will be subject to straight income tax.
The likelihood of being looked at by the CRA is high because of the number
of flips that are taking place right now.
Every sale in some buildings will be looked at.
I am up to my ears but will give you an old answer here.
==================
My daughter is closing on a presale Yaletown condominium this summer.  She
is working until Christmas in Alberta.  She returns to Vancouver from Jan to
May and if the job becomes a full time position, then she may return to
Alberta to live.  At the time of presale, February 2004, we thought that the
suite would be assigned to her and that she would live in the suite.
I was hoping that she could declare the suite as her permanent residence
since she is only renting in Alberta and the work is not permanent.    In
May 2007, she could decide to keep or sell the suite.
What does she need to do in order to qualify the suite as her permanent
residence?
  -----------------------------------------
david ingram replies:
There is no absolute answer because you can call a toad a frog all day long
but it is still a toad.
To be a principal residence and tax free for income tax purposes, the
property must have been bought by her to live in and she HAS TO move into
it. - No exceptions that I know of.
You can expect that the CRA will be looking at "every" quick resale in EVERY
downtown building.
In deciding if it is a capital gain or a flip, the CRA will be looking at
the suitability of the unit as a residence, the ability to pay for the unit
and past and even future performance.
In other words if she claimed this one as a principal residence and then did
it again a year later, the CRA would have every right to go back and
reclassify the first one.
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