mother selling rental home to son - when is it tax

My question is: Canadian-specific
QUESTION: My son has been in my rental home under a lease/
option to buy arrangement since last July.  He is now
exercising the option to purchase and home will be
deeded to him this month.  When would his residency
requirement be met in order to sell the property without
capital gains having to be declared?
david ingram replies:
I think you are trying to beat the system and are going to get burned.
If I am reading you right, you have likely had this house for a long time,
have moved your son in and now think that if he buys it from you and sells
it, the profit will be tax free.
Not so.
If, for instance, you bought it for $100,000 ten years ago and it is worth
$260,000 now when your son takes it over, YOU will owe tax on the $160,000
change in value even if you sell it to him for $100,000.  The good news is
that only 50% of it is taxable as a capital gain.
If he is truly buying it to live in, he could be there for a month and it
would be tax free if he was transferred to Toronto or had to sell it
unexpectedly because of job loss, a divorce or other disaster.  Just
remember, his cost price is the fair market value, not what you sold it to
him for.
On the other hand, if he is buying it to sell "for sure" at a profit and NOT
because he wants to live there as his home, then he could be there for two
years and if the CRA found out he bought it to flip, "any" profit it is
taxable at straight tax rates.
I need more information.
The following is an answer I gave to someone else.
My question is: Canadian-specific
QUESTION: If I bought and moved into a house and decide 6 months later that
I don't like it and sell that house to move elsewhere do I attract capital
gains on the sale of my home?
david ingram replies:
And how high is up?
If you bought a house to resell any profit is taxable at ordinary income
rates unless you can get it into another category.
If you bought a house or cabin to rent or use as a second home and decide
ten years later to sell it for some reason or other, it is likely a capital
If you buy a house and decide to sell it in six months, you can expect that
the CRA "might" try and tax you at full rates unless you can show that the
house was truly your principal residence and that you sold it for reasons
other than making a profit.
reasons might be:
1.    You lost your job
2.    The school your child goes to is just not any good
3.    You cannot stand your neighbour
4.    You get divorced
5.    you are transferred to another city
6.    You are pregnant and need a bigger house
7.    My favourite was a couple who ended up in a battle with organized
druggies and sold out in fear of their lives.
However, if you bought a fixer upper and fix it up and sell it and buy
another fixer upper around the corner and your kids keep on going to the
same school and you shop at the same stores and catch the same bus, etc.,
you will be paying straight tax.
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