QUESTION: We are Austrian citizen's and currently living an working in
canada on a work visa (already 2 years in canada). We bought a house last
year in September and now our plans have changed and we are moving back to
Austria in 1 year. Do we have to pay capital gains tax, when we sell our
house?
Thanks TXXXXXXXXXX
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david ingram replies:
As described, there would not be any tax on the sale of your house because
it was bought as a principal residence and your plans changed.
david ingram
The following Q & A explains some other possibilities.
-------------------------
My question is: Canadian-specific
QUESTION: Hello there was wondering about Capital Gain, Just bought the
house l am currently living in. But l don't like the house so l want to
sell. Do l have to pay capital gain if l do so sell. How long do l have to
stay there. Thanks Dan D
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david ingram replies:
Ozzie jurock has asked me to answer this for him.
If you truly bought the house as a permanent home and truly do not like it
because of the neighbourhood, schools, transportation or a dozen other
reasons you might come up with, the sale would be a tax free sale of a
principal residence.
On the other hand, if the reason you give is that you did not like the
neighbourhood, school, transportation and you sold the fixer upper you
remodelled and bought another fixer upper around the corner with the same
school, church, bus route, etc., you will have a hard time proving that the
purchase fixing and sale of the first one was not just a part-time business
of remodelling homes which means straight tax, not even capital gains tax
treatment.
There is no definition of how long you have to stay in the house before it
is tax free as a principal residence. The rule is that you have to have
actually lived there and intended to live there for a long time as your
primary residence to be tax free.
In general the buying and selling of any piece of real estate is straight
income "unless"
1. you bought a house and lived in it as a principal residence in which
case it is totally free of income tax
or
2. you had a second vacation home for a time and sold it in which case it
would be a capital gain
or
3. You bought a rental home and sold it ten years later in which case, if
it was truly an investment, it would be a 50% taxable capital gain.
However, all sorts of people who bought a place to flip and then ended up
renting it out over a long term after a market down turn were taxed straight
tax because they had put the house up for sale shortly after buying it and
only rented it out to help pay the costs while holding on".
Goto www.centa.com, click on Tax Guide in the top left hand corner box and
then read the "capital gains section".
====================
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