Capital gain or tax free Principle residence -

My_question_is: Canadian-specific
Subject:        Capital gain/Principle residence
Expert:         [email protected]
Date:           Sunday March 18, 2007
Time:           02:03 AM -0500

QUESTION:

Hi,
I had purchased a house in jan 2006 for my personal residence and started doing some repairs before we could move in the property but in the meantime my wife lost her job and therefore made extermly dificult for us to hold the house based on my income alone.

We sold the house in April,2006 for a gain,since property prices had gone up by then.
My question is
1.Can i claim principle residence exemption on this house since this was only proprty we owned in this year,no other proprty owned by both of us(husband and wife)

2.If not,what will be the taxes on a capital gain of 70000?
 
Best regards

_______________________________________________________
david ingram replies:

If you did not move into it but can prove that you intended to, it is subject to capital gains tax on 1/2 of the profit.  If you had something like a builder's mortgage on it, the CRA will not believe you and want to tax you on all of the profit.

If you did not move in, it can NOT be a tax free principal residence because you did not ordinarily inhabit it.
 
The 70,000 is cut in half and only $35,000 is taxed if it is in both names.  Then you would presumably cut the $35,000 in half and you would report $17,500 and your wife would report $17,500.  The tax at that point would range from 23% if your wife's income was less than $35,000 for the year to over 43% if your other income was over $120,000
 
david ingram wrote:
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Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or a phone consultation is in Canada.
 
This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
 
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,000 would be the same with one rental
 
$1,200 would be the same with one business no rental
 
$1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,600 would be for two people with income from two countries

$2,800 would be all of the above and you moved in and out of the country.
 
This is just a guideline for US / Canadian returns
 
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $150.00 up.
 
With a Rental for $350
 
A Business for $350 - Rental and business likely $450
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
 
8891 forms are generally $50.00 to $100.00 each.
 
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.
 
Just a guideline not etched in stone. 
 
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