James
Senior Member
^ Agreed. I simply can't fathom how she could justify not paying capital gains tax on a 2nd property because she "lived in it" for 2 weeks. It's a 2nd property, period. You sell it, you pay capital gains.
“My husband would have had to watch television in the living room.â€
That's awesome. A CA tries to claim, WITHOUT SELLING HER OTHER HOME, that her principal residence changed for two weeks and therefore she should not have to pay taxes on the capital gain. And then complains about it to the minister and the Star! Talk about chutzpah -- I'm truly in awe!
What an outrage.
Other than the fact that there's a question as to whether she "ordinarily inhabited" the condo if she only lived there for 15 days, there's absolutely nothing wrong with what she did. There's no limit on the number of "principal residences" you can own at a time, as long as you "ordinarily inhabit" all of them (although you can only claim one in any given year for the purposes of the exemption). For example if you own a cottage that you regularly go to each year but only for two weeks, that still counts as "ordinarily inhabiting".
Other than the fact that there's a question as to whether she "ordinarily inhabited" the condo if she only lived there for 15 days, there's absolutely nothing wrong with what she did. There's no limit on the number of "principal residences" you can own at a time, as long as you "ordinarily inhabit" all of them (although you can only claim one in any given year for the purposes of the exemption). For example if you own a cottage that you regularly go to each year but only for two weeks, that still counts as "ordinarily inhabiting".
A property qualifies as your principal residence for any year if it meets all of the following four conditions:
It is a housing unit, a leasehold interest in a housing unit, or a share of the capital stock of a co-operative housing corporation you acquire only to get the right to inhabit a housing unit owned by that corporation.
You own the property alone or jointly with another person.
You, your current or former spouse or common-law partner, or any of your children lived in it at some time during the year.
You designate the property as your principal residence.
Principal residence
If you sell your home for more than what it cost you, you usually do not have to report the sale on your income tax and benefit return or pay tax on any gain as long as:
your home is your principal residence; and
you or a member of your family did not designate any other property as a principal residence while you owned your home. For more information, see Principal residence.
Y'all are out to lunch. You're misquoting the CRA and trying to do the same weasel she's claiming.
From the link above:
"For 1982 and later years, you can only designate one home as your family's principal residence for each year."
and:
"When you sell your home or when you are considered to have sold it, usually you do not have to report the sale on your income tax and benefit return and you do not have to pay tax on any gain from the sale. This is the case if the home was your principal residence for every year you owned it.
If your home was not your principal residence for every year that you owned it, you have to report the part of the capital gain on the property that relates to the years for which you did not designate the property as your principal residence."
Hank's 'ordinarily inhabiting' line is not true, and hasn't been since 1982. Furthermore, our CA in question is trying to have her cake and eat it, too -- the deposit she put down was five years before, and there's no way she could live in it until it was finished. So, she's trying to claim five years of gains rather than changing her primary residence as of the day she moved in (i.e. the price two weeks beforehand) which would not be to her advantage. I don't know what happens with a condo that you buy pre-construction and then live in for ten years, but it's pretty much a foregone conclusion that this was a tax dodge.
Now, as I originally mentioned, the question in this case would be whether I actually ordinarily inhabited it in 2013 or whether I just pretended to do so and in fact always intended to flip it for a profit; this comes down to a question of intention and actions and is often a difficult distinction to draw.
Hank: I'm assuming you're also a tax accountant bogged down in the esoterica of the statute, much like our CA who did the flip. If she had sold her other house to move to the condo, you could make a case that she wasn't flipping the condo. But that's not what she did. She lived in another principal residence for the entire time the condo was under construction, moved into the condo for much, much less than a year (do you think she moved the matrimonial bed? Or the paintings? Or did she just take the TV and her camping gear?), sold the condo and moved back to her principal residence of her entire (recent) life. C'mon -- you're smarter than that. It ain't 'difficult' to figure out the 'question of intention and actions', even if you wish the lady hadn't been caught, so you'd be able to use that dodge yourself.
I'm a tax lawyer.