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My question is: Canadian-specific (And another country is involved)
QUESTION:
Hi, I do not have landed imigrant status in Canada but live here for 9 months of every year. I have a permanent residence in Canada.
Is there any reason why i cannot claim PPR exemption from capital gains when i sell?
Thanks
PXXXXXX
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david ingram replies:
Being in canada for 9 months a year makes you liable for Canadian Income Tax on your world income.
Assuming that you have been and are filing tax as a resident for the number of years you have spent 9 montrhs a year here, you should be eligible for a personal residence exemption upon the sale of your house.
Of course, you can only have "one" house tax free during any one period of time.
Therefor, if you have a house in the US or any other country that you consider to be your personal house and which you intend to claim as a tax free residence, the Canadian house would NOT be eleigible for the tax free
status.
In other words, you can claim one or the other tax free. And this does not mean, sell one house tax free this year and the other one tax free next year.
The T2091 declaration of principal residence form requires you to declare the years you "lived" in it and the years you are declaring it tax free. (The US requires
you to have lived in your house for 2 out of the last three years).
Therefor, once you have declared a tax free house fop 99, 2000, 2002, 2002 and 2003, the other house becomes taxable on a prorata basis for those years.
Read the US / Canadian section and the Dennis Lee case which you can find at:
http://www.centa.com/U.S.Cdntaxation.htm
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