My question is: Canadian-specific QUESTION: My mother lives in White Rock and purchased her house in 1986 for $99,000. This is her principal residence. She is now interested in selling her house which is currently valued at approx $650,000. Will she be required to pay any capital gains tax? --------------------------------------------------------------------------- david ingram replies: The easy answer is to say that there is no tax on any amount of profit on your mother's White Rock House. However, we are talking 19 years from 1986 to 2005 and a lot can happen in 19 years. For instance, if your mother and father had also owned a waterfront estate on Saltspring Island or a big house in Whistler and their "seasonal" home went up more than the house in White Rock and dad passed away three years ago and the Whistler or Saltspring place was sold with a $1,000,000 profit, the wise thing to do would have been to claim the seasonal home tax free as their principal residence. In that case, the profit on the White Rock House would be taxable on a prorated basis for the time that the seasonal house was claimed tax free. To do the calculation, you must prepare form T2091 available at the CRA website or click here: http://www.cra-arc.gc.ca/E/pbg/tf/t2091_ind/t2091-ind-04e.pdf the T2091 worksheet is at http://www.cra-arc.gc.ca/E/pbg/tf/t2091_ind_-ws/t2091-ind-ws-04e.pdf However, if there was no second residence during that time, the house in White Rock is 100% tax free if she lived in it as her principal residence or designated it as her principal residence under section 45(2). 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, I, david ingram am a permanent guest on Fred Snyder of Dundee Wealth Managers' 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/> Call (604) 280-0600 to have your question answered. BC listeners can also call 1-866-778-0600. Callers to the show and questioners on this board can also attend the Thursday Night seminars on finance and making your Canadian Mortgage Interest deductible. David Ingram's US/Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists Home office at: 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Cell (604) 657-8451 - (604) 980-0321 Fax (604) 980-0325 Calls welcomed from 9 AM to 9 PM 7 days a week (please do not fax or phone outside of those hours as this is a home office) email to taxman at centa.com <mailto:taxman at centa.com> www.centa.com <http://www.centa.com/> www.david-ingram.com <http://www.david-ingram.com/> Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. 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CEN-TA Cross Border Services - Tax, Visas, Immigration
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