My question is: Canadian-specific
QUESTION: I own a home that I purchased in 1973 for $32,000. For the first
6 years or so I rented a suite in the basement and declared the income on my
tax returns. I did not take any CCA. In 1982 I married and my husband and I
lived in the home until 1988 when we built and moved into a new home. Since
then, I have had several family members live in my original home, some rent
free, and others paid modest rents that I declared on my tax returns. The
house has been vacant for the past two years. I am now considering either
selling or renting it. I also claimed the $100,000 tax free deferral
against this property in 1984. (I believe that was the year.) Assuming
that the house would not be claimed as my principal residence after my
marriage, and assuming that relevant values were 200,000 at the time I
married, and $400,000 currently, what would be the tax implications if I
sold it? Also, if I chose to rent it what are the compliance requirements
if any?
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david ingram replies.
When you sell, you will have to fill out a form T2091
You can find that form at
http://www.ccra-adrc.gc.ca/E/pbg/tf/t2091_ind/t2091_ind-02e.pdf
This form separates your ownership into the years from Jan 1, 1972 to Dec
31, 1981 and from Jan 1 1982 onward
HOWEVER,
Because you claimed the $100,000 top up exemption in 19"9"4, you also have
to fill out a T2091 worksheet.
which you can find here:
http://www.ccra-adrc.gc.ca/E/pbg/tf/t2091_ind_-ws/t2091_ind-ws-02e.pdf
This form deals with the Jan 1, 1972 to Dec 31, 1982 and then from the
period Jan 1, 1982 to the end of 1994,
Much as I would like to spend a couple of hours figuring it out for you, it
is not a general answer which I try to answer here.
Load the forms and and try and figure it out. If yoiu can't, you need to
consult a tax consultant and expect to pay a couple of hundred dollars to
have it worked out for you.
Basically if you did not have the $100,000 top up, yoiu would proceed as
follows with the form T2091 alone.
You will tell the government what years you owned the property and what
years you are designating the home to be your prinipal residence.
Assuming you bought the house in Jan 1973, you will have owned it for 21
years. Assuuming you lived in it until June, 1988, you will have lived in
it for 16 years.
Your profit on the house is $400,000 - $32,000 = $368,000 and the tax office
assumes it was on a straight line.
Your tax free portion is therefore 16/21 x's $368,000. 50% of the taxable
balance (about $40,000) would end up on line
127 of your tax return and would be taxable at your normal rates.
This will be changed when you substitute the figures from the T2091WKS
Hope this helps a bit.
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