Hello David,
Thank you for the consultation on the phone right before you left
for a vacation this summer. Hope your vacation went well.
We have a condo that we purchased in 4/2004 which was not yet
built. It completed in 4/05 and we immediately leased it out.
Originally our plan was to purchase it and lease it for 15 months
or so, and we will live there when we move up to Vancouver, BC.
Currently we live in Seattle (Husband dual - American and
Canadian) and I am an American currently applying for a Canadian
PR.
We changed our minds and now we are in the middle of the
townhouse hunting for us to live there when we move up. As the
townhouse cost more that the fund we have, we are thinking of
selling the condo when the tenant's lease is up 4/06.
Although we signed the purchase in 4/04, we didn't own it until
4/05 when the condo was completed. So if we were to sell the
condo in 4/06, it becomes only 1 year that we own the condo?
Then do we need to pay a capital gains although the whole time it
was a rental? Does it matter that when we purchased it, our
intention was to lease it for a year or so, and then we were to
move in to the condo? Would our intention to live there in the
future make it not a rental property? We have not lived there at
all.
Please advise. Thank you.
------------------------------------------
david ingram replies:
I do remember your consultation and we had a great trip. Went to
the Canadian Okanagan and then south to Grand Coulee Dam (spent
23 hours there to see it all), then on to Pendleton where we went
through the Underground city, saw a movie, went through the
museum, went through the Pendleton Woollen mills and ought 4
blankets and then picked up a 1988 Jeep Grand Wagoneer which I
had bought and paid for sight unseen on the internet. It is a
great car. then we went to Seattle and did a day at the Woodland
Zoo, half a day at the Aquarium, saw the underground tour and
went to the Museum of Flight twice because we were too late to
see the Concord the first time. Then we went antique shopping
and bought a replica of the typewriter I bought myself in grade 7
and a few presents for friends. Then we did the Outlet stores in
Everett and went home. Great Trip with only three hitches, all
involving the 26 year old motorhome. First, the transmission
cooler started leaking at 2 PM on a Saturday in Kelowna. The
folks at Mr Transmission had gone fishing early that day but we
were able to get Canadian Tire to throw a new cooler on in half
an hour. Secondly, I had had headers installed before we left and
somehow or other the oil dipstick did not get reinstalled
properly and came out and threw oil all over the side. The oil
on the side was lucky because I was able to crawly underneath and
after an hour of fussing around managed to get it back in. The
third was the most annoying because our sewage tank sprung a very
small leak - drip---------------drip --------------- drip
well, you get the idea. However, everything is fixed now and we
even put a new furnace in the motorhome yesterday to do some
winter weekend get-aways.
to your question. .
Unfortunately, if you only owned it a month as a non-resident and
it was rented out, it would be subject to Canadian and US capital
gains tax if it went up in value in that month.
To make it tax free for Canada , it would have to be bought to
live in and lived in. For US purposes, you would have had to
live in it for two full years unless a serious problem resulted
in your having to sell it sooner. (wanting a larger place would
not be a reason unless you were suddenly having twins or
something or your mother was coming to live with you).
Canada does not require two years but you had to have lived in it
with the intention of its being your full time personal residence
BEFORE you rented it..
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
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
www.centa.com 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. All readers should obtain formal
advice from a competent and appropriately qualified legal
practitioner or tax specialist in connection with personal or
business affairs such as at www.centa.com. If you forward this
message, this disclaimer must be included."
Be ALERT, the world needs more "lerts"
This from "ask an income tax and immigration expert" from
www.centa.com or www.jurock.com or www.featureweb.com. David
Ingram deals on a daily basis with expatriate tax returns with:
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Immigration Tips, Income Tax and Immigration Wizard Income Tax
and Immigration Guru Income Tax and Immigration Consultant Income
Tax and Immigration Specialist Section 216(4) 216(1) NR6 NR-6 NR
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