capital gains on home in Canada when newlywed couple

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Hello,
my first email was not clear, I bought the one bedroom when I was single, stayed there from March 2001 until July 31, 2003.  I got married in July 2003 then moved to my Husband's place in August 2003.  So The rental of my one bedroom unit started August 1, 2003 until now.  
Since me and my husband are planning to buy a bigger place my husband sold his share of a fourflex (my husband owned 1/4 of the duplex the rest are owned by his sister and friends) and since the equity he received is not enough as downpayment for a 2 to 3 bedroom townhome, I am planning to sell my one bedroom (currently being rented out).
Although my husband is thinking of looking for an inexpensive 4 level (3 bedroom apartment style new unit) so we do not have to sell my one bedroom unit which is currently being rented out.   If we would postpone the selling of  my one bedroom unit (example) 4years (being rented out) how much would the Capital gains would be after 4 years if we decide to sell the rental unit by year 2008. 
 Can I still declare the one bedroom unit (currently being rented out) as my principal residence even though me and my husband (example) decided to  buy the 2 bedroom  apartment style unit? 
 when you say Principal residence, does it means the address I need to use in all my paperworks, banks, income tax, etc is the address of my rented one bedroom unit, meaning I will not use the address where me and I husband reside? Please correct me if I am wrong.
 Would it be wiser to sell my one bedroom unit (rented out) now so  that we would enjoy the equity of my one bedroom unit  rather than sell after 4 years and pay the capital gain tax (at what percentage?)? I am thinking my equity might just go the the realtor and to Capital Gains.
Thanks,
CXXXXXX
==========================================
My answer was very clear.  Your unit was tax free while you were living in it and would be tax free for up to four more years if you moved into a rented place with your new husband. However, you have now told me that your husband owned part of a four-plex before marriage and that is what you moved into. 
I did cover that possibility as well but more definitively, his unit was tax free before marriage and would be tax free after marriage if you decided to pay the tax on yours. 
In other words, since he owned a place as well only ONE OF THEM can be tax free during the same time period from your date of marriage.
You cannot live in one, sell it, move into the other one and sell it and claim them both tax free.  Moving intot he rental one triggers tax as a deemed disposition when you move in.
If his went up $30,000 and yours went up $10,000, it is only logical you would claim his tax free as a couple.  If his stayed level and yours went up $10,000, you would claim yours tax free.  It is simply a matter of deciding which one is the most advantageous to claim for you as a family.  
This has nothing to do with your mailing address.  It refers to the home in which you lived OR if you have one you live in and one you rent out, it refers to the one that "YOU" decide to designate per form T2091.
  
If the unit went up $10,000 during its rented period (after real estate commission and cost of sale) the highest tax you sould pay would be about 22.5% if your other income was already over $60,000  If you added The $10,000 gross capital gain to a $20,000 income, your tax on the $10,000 would only be 12%.
Remember that you only pay tax on one half odf the capital gain.  The figures quoted were actually 45% of $5,000 and 25% of $5,000
The two of you need to sit down with someone like myself and make sure that you know what the rules are.
  ----- Original Message ----- 
  From: David Ingram at home - bus at [email protected] 
  To: xxxxxxxxxxxx 
  Sent: Tuesday, December 09, 2003 1:01 AM
  Subject: capital gains on home in Canada
  ----Original Message-----
  From:  xxxxxxxxxx
  Sent: Sunday, December 07, 2003 8:38 PM
  To: [email protected]
  Subject: capital gains
  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,
  Cxxxxxxxxx
  ==========================================
  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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