New York sister owns half of Vancouver Condo her mother

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My question is: Canadian-specific
QUESTION: My mother and I currently live in a 2 bedroom suite in downtown Vancouver which my sister and mother co-own, and my sister pays the mortgage. My sister lives in New York and sold all her assets when she moved there. Now we're looking at selling the apartment but she doesn't want to pay taxes on the gain from selling the apartment. 
Im under the impression right now that if you sell the house that has been claimed as your principle residence then you don't pay tax on your capital gain. So my mother's share (50% of the profit) will not be taxed, but will my sister's 50% portion be taxed? or can she still claim this apartment as a principle residence (even though she lives in NY).
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david ingram replies:
The qustion is "anything" but Canadian Specific.
1.    Assuming that your NY sister actually owns the apartment and expects to get her money when she sells it, your sister will be taxable on her share of the apartment's increase in value since the day she moved to New York.
She will be taxable in Canada first and in New York State and the United States Federally second.
This assumes that she was living in the apartment before she left and it was her principal residence before she left.
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2.    If your sister did not own the apartment but it is in her name because it was necessary to get the mortgage, it would not be taxable.  However, for this outcome, all the money from the sale would go to your mother with your sister being paid back whatever she had loaned your mother and your mother keeping the profit.  In this case, I would assume that your sister did not live in the unit before moving to New York. 
3.    Your sister will likely be claiming herself as a non-resident of Canada so that she is not paying tax to Canada on her New York earnings.  This means that the apartment can not be a principal residence after she leaves.  If, onthe other hand, she was filing as a Factual resident of Canada and was returning regularly, the apartment could be considered a principal residence.
Did your sister file her T1161 when she left Canada after it is three months late, the penalty is $2,500.  This is the form where she would list all her assets before she left Canada.  The apartment should have been listed at that time.
 Departing Canada returns require a T1161 and possibly a T1243 and T1244. 
http://www.ccra-adrc.gc.ca/E/pbg/tf/t1161/t1161-03e.pdf
This is the form to calculate the tax on the T1161
http://www.ccra-adrc.gc.ca/E/pbg/tf/t1243/t1243-03b.pdf
This is the form that defers tax on the deemed disposition
http://www.ccra-adrc.gc.ca/E/pbg/tf/t1244/t1244-03b.pdf
Note that our office is a Licenced Real Estate Agency which specializes in "out of country" sales and the taxation thereon.
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