13.01.2021
Do you know that every time you sell your house you have to report it in your personal tax.
If you lived in your house, then will be tax exemption.
2- Do you rent a part of your house which you live in or do you rent the whole house.
Do you know if you decided to sell the house you may be subject to tax in a half of your capital gain in your house or part of it if you didn't file an election to get the principle resident exemption up to 4 years during renting the house?
More Details:
Case #1: If you have one house you live in then when sold, you have to report the sale in your personal tax in schedule 3.
In this case you will not subject to any tax because the capital gain will be fully exempt because this is the only principle resident you have.
Case #2: If you have one house and you used it as principle resident means you lived on it, then you changed the use of the whole house to rent it out. In this case the year which you changed the use will be consider as s deemed disposition for the house and the deemed disposition has to be reported in the year of changing the use of the house.
Then the New house value will be the value which is the fair market value of the year the change in use happened.
When you decided to sell the house later, it will be subject to tax on capital gain based on years was rented out.
There is election can be filled to save you from tax up to 4 years to consider the principle as principal resident for up to other 4 years.
Case#3: If you have more than one house and let's assumed that the first one purchased in 2012 and the second one in 2015. Then decided to sell the first one this year.
Then when you report the selling of the house in the personal tax you will be entitled to get the principle resident exemption for those year from 2012 till this year.
However, if you decided to sell the other house in 2025 then, and even though it was used just for personal use then you will just be eligible to claim the principle resident exemption for the years after 2021 till 2025.
So the other years you have owned the house before these years will subject to tax on capital gain because the other years used with the first personal home.
Please send me your case to help you determine the tax impact.
If you have any question regarding this topic, please type it in the comment to be able to address your concern in the details of this topic.
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