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Hello,
How much capital gains would I pay if I sell my one bedroom unit which I lived in for 1 1/2 years and rented it out (currently on it's fifth month as rental unit) after I got married. We are thinking of buying a new bigger home for me and my husband, we will use the equity as downpayment for a new home.
thanks,
CXXXXXXXXXXX
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david ingram replies:
It sounds like you moved out of your condo into a rented place that your husband already had.
If that is true, there would be no tax on the sale of your unit. Form T2091 allows you to rent the unit out for up to 4 years without capital gains tax if it is the only one that you and your husband actually own. To make this happen, you have to make an election under Section 45(2) of the Canadian Income Tax Act to continue to designate the condo to be your principal residence even though it was rented out.
If he also owns a home during the same time, you have to choose which one you intend to claim tax free.
Since this is also read in the US, you could claim a pro-rated amount up to $250,000 tax free. You are supposed to have lived in it for two years to claim the whole $250,000. If you move for a good reason (and marriage is likely a good reason) you have to prorate the $250,000 by the number of days you actually lived in it.
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