Part II Moving into your rental

Some people do not like being corrected.  I love it when someone
points out something I missed.
Thanks Ross
-----Original Message-----
From: Ross McDonald [mailto:rossmcd at]
Sent: Friday, March 03, 2006 7:02 AM
To: taxman at; centapede at
Subject: RE: [Income Tax Help - CEN-TAPEDE] Moving into your
rental property inCanada - David Ingram specializes in giving
expert income tax and immigration help to American and Canadian
citizens living out of their home countries from Zimbabwe to
Saudi Arabia to
Hi David,
As a footnote to this question, if the rental property had been
depreciated then in the year of the parents moving into it they
would also trigger recapture of CCA and unlike the capital gain,
the tax on the recapture may not be deferred.
Ross McDonald
-----Original Message-----
From: at
[ at] On
Behalf Of centapede at
Sent: Thursday, March 02, 2006 1:43 AM
To: CENTAPEDE; Webmaster at Jurock. Com
Subject: [Income Tax Help - CEN-TAPEDE] Moving into your rental
property inCanada - David Ingram specializes in giving expert
income tax and immigration help to American and Canadian citizens
living out of their home countries from Zimbabwe to Saudi Arabia
to Mexi
Hi David
My parents, who were non-resident at the time, bought an unbuilt
(at the time) 2 bedroom unit several years ago with the intention
of retiring into it when the complex was completed. The complex
was completed before they could sell their business overseas, so
they were delayed in making their move back to Vancouver. In the
meantime I rented it out to cover the mortgage and property tax
They have since retired and moved to Vancouver, and have
reclaimed their 2 bedroom unit to live in as their primary
residence. The CGA that they have consulted insists that there is
a capital gains tax due and it is payable immediately since there
has been a change in use. Is this true, why would there be a
capital gains tax due if : 1.) there is no deemed disposition and
2.)_they purchased it to live in as their primary residence?
I believe I read one of your newsletters in which you state that
an election can be made to defer capital gains tax until they
actually dispose of/ sell the property. If this is so, can you
please tell me what process/ election needs to be filed.
Thank you.
W xxxxxxxxxxx
david ingram replies:
The CGA is correct.  When anyone moves into a property they have
rented out, there is a deemed disposition and capital gains (or
losses) must be calculated and form part of the income tax return
for the year the owner moved in.
However, Section 45(3) of the Income tax act allows them to
acknowledge the taxable income on line 127 and elect to defer
paying the tax (with no interest or penalty) until the property
is actually sold by deducting it on line 256 of the tax return..
And what, pray tell are you doing allowing your non-resident and
now immigrant parents to deal with any one but us.
tsk! tsk! tsk!
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa
US / Canada Real Estate Specialists
Home office at:
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 10 PM 7 days a week (please do not
fax or phone outside of those hours as this is a home office)
email to taxman at
Disclaimer:  This question has been answered without detailed
information or consultation and is to be regarded only as general
comment.   Nothing in this message is or should be construed as
advice in any particular circumstances. No contract exists
between the reader and the author and any and all non-contractual
duties are expressly denied. All readers should obtain formal
advice from a competent and appropriately qualified legal
practitioner or tax specialist for expert help, assistance,
preparation, or consultation  in connection with personal or
business affairs such as at If you forward this
message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
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