Subdividing North Shore lot and building a house for

My question is: Canadian-specific
QUESTION: Hi – our North Shore home is on a 0.25 acre 66 ft frontage lot we
bought in 1998.  With the insane real estate values, the house has gone up
substantially from what we paid ($353K).  It is older and now too small for
us, so we are currently in the process of subdiving to 2 x 33’ lots.  It is
our intention to build 2 homes (total build cost for both approx. $550+),
keep one and then sell the other for $750K-$800K.  What are the tax
implications with this since the original house + whole lot have always been
our primary residence?  Is it better to sell the extra lot to the contractor
and have him build or should we keep it in our name and have him build?
Obviously, we want him to build it, but then we want to sell it for as much
profit as possible to pay off our mortgage on the other new house.  Is
selling the extra house a capital gain that qualifies under the $500,000
exemption or is it straight income tax or is it exempt because it was part
of our original primar!
 y residence?  Is there any way to get around this?  I take it every single
expense in subdiving the lot and developing the new homes can be a tax
write-off?  Any help you can provide is much appreciated.  Many thanks.
---------------------------------------------------------------------------
david ingram replies:
I am too busy to deal with this as part of the list at this moment and you
are on the north shore where my home office is located.
I would charge you a minimum consultation fee of $401.25 ($375 / hr plus
GST) to talk to you about this and recommend that you take me up on the
offer or at least find some one else with my experience to advise you.
In the meantime, I want you to read my chapter on the subject which you can
find at www.centa.com - click on Tax Guide and then click on the chapter on
Capital Gains
AND read the CRA bulletin on the subject which you can find at:
http://www.cra-arc.gc.ca/E/pub/tp/it120r6/it120r6-e.pdf
Very few tax people really understand this so be careful with your decision.
For free, you will pay tax on the difference in the sale price of the
building and what it cost you.
The lot itself should be tax free.  You will also have to collect GST on the
sale of the new home.
AND living in it for a month will NOT reduce your tax, it will increase it
if the tax office goes after you.  You should / must come out to one of the
FREE Seminars as below:
Every Thursday evening Fred Snyder and I hold a free seminar at Fred's
office at 1764 West 7th (corner of Burrard in the Spence Diamond building)
in Vancouver.
The topics are:
  Seg funds and an alternative to the traditional RRSP.
   Making your mortgage income tax deductible
  Critical Care insurance for disasters.
coffee and cookies of course.
Phone 604-731-8900 to reserve your seat -and, you are welcome to bring your
brother, your sister, your mother or father, your children, your best
friend, your worst enemy or your own financial advisor who hasn't explained
how to make your mortgage deductible.
Another Seminar is starting in Victoria at 7 PM on Tuesday Nights. call
1-250-472-0700 to register.
==========================
Answers to this and other similar  questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth
Management and I, David Ingram  host a LIVE talk show called "ITS YOUR
MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com <http://www.600am.com/>
Local calls are taken at (604) 280-0600 and Long Distance calls (BC only)
are taken at 1( 866) 778-0600
Callers to the show are invited to attend free seminars on financial
planning with such specialities as deductible mortgage interest. They are
held at Fred Snyder's Office at 1764 West 7th in Vancouver - (604) 731-8900
for more information.
=========================================
This from "ask an income tax and immigration expert" from www.centa.com
<http://www.centa.com/>  or www.jurock.com <http://www.jurock.com/>  or
www.featureweb.com <http://www.featureweb.com/> . David Ingram deals on a
daily basis with expatriate tax returns with:
multi jurisdictional cross and trans border expatriate problems  for the
United States, Canada, Mexico, Great Britain, the United Kingdom, Kuwait,
Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France,
Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia,
Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran,
India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba,
Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK,
GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas,
San Antonio and Houston Texas
Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration
Tips, Income Tax and ImmigrationWizard Income Tax and Immigration Guru
Income Tax and Immigration Consultant Income Tax  and Immigration Specialist
Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist
expert preparer consultant expatriate anti money laundering money seasoning
FINTRAC E677 E667 4789 4790 TDF-90 Reporting $10,000 cross border
transactions
=========================
Alaska,  Alabama,  Arkansas,  Arizona,
California,  Colorado, Connecticut,
Delaware, District of Columbia,  Florida,
Garland, Georgia,  Hawaii,  Idaho,  Illinois,
Indiana,  Iowa,  Kansas,  Kentucky,
Louisiana,  Maine,  Maryland,
Massachusetts, Michigan, Minnesota,
Mississippi,  Missouri,  Montana,  Nebraska,
Nevada, New Hampshire,  New Jersey,
New Mexico, New York, North Carolina,
North Dakota,  Ohio,  Oklahoma,  Oregon.
Pennsylvania,  Rhode Island,  Rockwall,
South Carolina, South Dakota, Tennessee,
Texas,  Utah, Vermont,  Virginia,
West Virginia, Wisconsin, Wyoming,
British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, Quebec City,
New Brunswick, Prince Edward Island,
Nova Scotia, Newfoundland, Yukon and
Northwest and Nunavut Territories,
Mount Vernon, Eumenclaw, Coos Bay
and Dallas Houston Rockwall Garland
Texas  Taxman and Tax Guru  and wizzard
wizard - consultant - expert - advisor -advisors consultants - gurus - Paris
Prague Moscow Berlin
Lima Rio de Janeiro, Santaigo
============================
New York, Boston, Sacramento, Minneapolis, Salem, Wheeling, Philadelphia,
Pittsburgh, Atlanta, Pensacola, Miami, St Petersburg, Naples, Fort Myers,
Cape Coral, Orlando, Atlanta, Arlington, Washington, Hudson, Green Bay,
Minot, Portland, Seattle, St John, St John's, Fredericton, Quebec, Moncton,
Truro, Atlanta, Charleston, San Francisco, Los Angeles, San Diego,
Sacramento, Taos, Grand Canyon, Reno, Las Vegas, Phoenix, Sun City, Tulsa,
Monteray, Carmel, Morgantown, Bemidji, Sandpointe, Pocatello, Bellingham,
Custer, Grand Forks, Lead, Rapid City, Mitchell, Kansas City, Lawrence,
Houston, Albany, Framingham, Cambridge, London, Paris, Prince George, Prince
Rupert, Whitehorse, Anchorage, Fairbanks, Frankfurt, The Hague, Lisbon,
Madrid, Atlanta, Myrtle Beach, Key West, Cape Coral, Fort Meyers,   Berlin,
Warsaw, Auckland, Wellington, Honolulu, Maui, Kuwait, Molokai, Beijing,
Shanghai, Tokyo, Manilla, Kent, Winnipeg, Saskatoon, Regina, Red Deer, Olds,
Medicine Hat, Lethbridge, Moose Jaw, Brandon, Portage La Prairie, Davidson,
Craik, Edmonton, Calgary, Victoria, Vancouver, Burnaby, Surrey, Edinburgh,
Dublin, Belfast, Glasgow, Copenhagen, Oslo, Munich, Sydney, Nanaimo,
Brisbane, Melbourne, Darwin, Perth, Athens, Rome, Berne, Zurich, Kyoto,
Nanking, Rio De Janeiro, Brasilia, Colombo, Buenos Aries, Squamish,
Churchill, Lima, Santiago, Abbotsford, Cologne, Yorkshire, Hope, Penticton,
Kelowna, Vernon, Fort MacLeod, Deer Lodge, Springfield, St Louis, Centralia,
Bradford, Stratford on Avon, Niagara Falls, Atlin, Fort Nelson, Fort St
James, Red Deer, Drumheller, Fortune, Red Bank, Marystown, Cape Spears,
Truro, Charlottetown, Summerside, Niagara Falls, Albany
--
No virus found in this outgoing message.
Checked by AVG Anti-Virus.
Version: 7.0.308 / Virus Database: 266.7.4 - Release Date: 3/18/05
--
No virus found in this outgoing message.
Checked by AVG Anti-Virus.
Version: 7.0.308 / Virus Database: 266.8.0 - Release Date: 3/21/05

Trackback

Trackback URL for this entry: http://www.centa.com/trackback.php/UsCaWeekofMon20050321001719.html

No trackback comments for this entry.

0 comments