I have a home on rural lake property. We purchased the place in 1999 and lived there for 2 years but not since. Now that we are considering selling and moving on to another location, I wonder waht the impact of capital gains will be? Our friends say that we can defer capital gains by calling the place our permanent residence now. My accountant has done a capital gains calculation based on the time we have lived there. Because of this, I had planned to move back into the house next spring for approximately one year. Some say that moving back there is not necessary. Is that correct? Thanks for your time ----------------------------------------------------------------
david ingram replies:
If it is the only jhome you owned, you may claim it tax free for the whole time even though you did not live in it.
If you owned another home, from the time you mioved out, either home can be your tax feee principal residence from 1999 to the present but when you claim one of them tax free, the other is taxable on the amounts calculated on form T2091.
In other words, you can claim either as your tax free residence. If you do have another house you intend to claim tax free from 2001 to the present, moving into the cabin will not make it tax free for the same time period.
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