How long to own home for tax free sale -

 Hi David,
 I currently live and work in Alberta but would like to buy an apartment for 
my wife and 2 children to live in Vancouver( they are currently living in
> Van)
> My question is: If we were to buy an apartment and I moved back to 
> vancouver
> in say 3 months and we decided that the apartment was too small, and we 
> then
> sold it would we have to pay capital gains.
> Thank you
> Mathew Barlett
> ---------------------------------------------------------------------------------------------
> david ingram replies:
> Dear Sir,
> I heard about that there is a capital gain examption on the principle
> resident. Is that the full amount can be exampted or the examption only to
> certain amount?
> ----------------------------------------
> david ingram replies:
> If you only own one house and live in that house, there is no limit on the
> profit from the sale of the principle or personal residence.
> This assumes that you bought the house to live in as a residence and not 
> to
> flip and are trying to make it "look" like your reason for buying it was 
> to
> live in it for a long time.
> The following older question will give you an idea of the timing.
> -==============
> I just moved into my new condo at XXXXX two weeks ago, my agent is already
> after me with a price  I can hardly refuse. Couple of questions about tax
> implications. How long do we have to live in a place to qualify for 
> capital
> gains tax exemption as principal residence. I also read in an income tax
> self help guide book that in Canada we can sell our principal residence 
> once
> a year capital gains tax exempt, is this correct?
> Thanks.
> ============================================================================
> ==
> david ingram answers:
> There is no absolute answer.  Each one is based upon the individual facts
> but let me try.
> One: The buying and selling of a house by itself is a venture in the 
> nature
> of trade and subject to tax at ordinary tax rates.  Therefore, if "anyone"
> buys a house and puts it up for sale when they buy it or fixes it up and
> sells it, the profit is taxable at ordinary tax rates.  i.e. a $20,000
> profit would be taxed at the same rate as interest, rents or wages.
> Two:    If the house was bought to rent out and one rented it out for ten
> years or twenty years and then sold it for any reason at all, the profit
> would be considered a capital gain and only 50% would be taxable at normal
> rates.
> Three:    But if one bought a house to sell and that was demonstrated by 
> the
> fact that it was listed soon after purchase and then rented out (because 
> the
> market dropped) for ten or fifteen years, the CCRA would likely try and 
> tax
> any profit on the sale as straight income because the "intention" was to
> flip it which is a straight business income.
> Four if one bought a house to live in it and did so for twenty years, it
> would be a tax free principal residence "UNLESS" there was a summer cabin 
> or
> a Whistler ski cabin which they claimed as their tax free residence for 
> the
> same period.  In that case, the cabin is tax free and the house they lived
> in is taxed at capital gains rates.
> Five:    If one bought a little house and lived in it for five years and
> then bought another house because they had twins and needed a larger 
> house,
> the sale of the first one would be tax free and in my opinion if life's
> circumstances changed every five years and a family moved every five years
> because of a life change, each house would be tax free.
> Six:    However, if one bought a "fixer upper" and lived in it for four
> years and sold it and bought another fixer upper and sold it four or five
> years later and then bought another one, etc., the CCRA would likely try 
> and
> tax the second and third house if the CCRA became aware of the
> carpentry/renovations part of the sales. Four or five years apart would
> likely escape the attention of the CCRA but two or three years would 
> likely
> get their attention.
> Seven:    If one bought their dream house and were transferred to another
> city two weeks after they moved in, the sale would be a tax free principal
> residence sale.
> Eight:    If one bought a house and someone offered an "unreal profit" two
> weeks later and they sold, the CCRA would likely want to tax the profit as 
> a
> straight income.  The reason is simple. You might think that because it 
> was
> an unsolicited offer it is not taxable but that is not the case.  There 
> was
> no reason to sell other than a profit.  That fact alone can make it a
> venture in the nature of trade.
> Nine:    However, if one bought a house or condo and five days after 
> moving
> in found out they were pregnant and would need a bigger condo or the
> penthouse in the same building became available, or they could not stand
> their neighbour or there was a smell from a pulp mill or their wife was
> unexpectedly" afraid to walk down the street because of muggers, 
> prostitutes
> or drug dealers or because she was propositioned by "johns"  every time 
> she
> went out the door, putting the place up for sale two weeks after moving in
> and actively soliciting a buyer would likely still leave a tax free
> principal residence sale.
> Another rule of thumb.  If the land registry show three buys and sells in 
> a
> one year period, it has been my experience that the person can expect to
> have their return scrutinized to see what is been reported. So if you sell
> your house in May, 2003, buy another in May and sell in June and buy 
> another
> in July, the CCRA is very likely to take a look.
> And, I believe that the answer to the question above is that the CCRA 
> would
> tax the sale if they spotted it.
> If the subject building has had several people buy a condo and flip it (I 
> do
> not recognize the building's name), then this person is likely to get 
> caught
> by the CCRA looking at the whole building for flippers.
> Log on to, click on tax guide and then on the capital gain
> section to read a bunch of actual tax cases where a lot of people paid
> straight income tax on items they wanted to claim tax free.
> A direct link would be to
> Last but not least, any self-help book that says you can sell a principal
> residence every year should be taken off the shelves immediately.
> Hope this helps
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> without detailed information or consultation and
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