My question is: Canadian-specific QUESTION: Hi – our North Shore home is on a 0.25 acre 66 ft frontage lot we bought in 1998. With the insane real estate values, the house has gone up substantially from what we paid ($353K). It is older and now too small for us, so we are currently in the process of subdiving to 2 x 33’ lots. It is our intention to build 2 homes (total build cost for both approx. $550+), keep one and then sell the other for $750K-$800K. What are the tax implications with this since the original house + whole lot have always been our primary residence? Is it better to sell the extra lot to the contractor and have him build or should we keep it in our name and have him build? Obviously, we want him to build it, but then we want to sell it for as much profit as possible to pay off our mortgage on the other new house. Is selling the extra house a capital gain that qualifies under the $500,000 exemption or is it straight income tax or is it exempt because it was part of our original primar! y residence? Is there any way to get around this? I take it every single expense in subdiving the lot and developing the new homes can be a tax write-off? Any help you can provide is much appreciated. Many thanks. --------------------------------------------------------------------------- david ingram replies: I am too busy to deal with this as part of the list at this moment and you are on the north shore where my home office is located. I would charge you a minimum consultation fee of $401.25 ($375 / hr plus GST) to talk to you about this and recommend that you take me up on the offer or at least find some one else with my experience to advise you. In the meantime, I want you to read my chapter on the subject which you can find at www.centa.com - click on Tax Guide and then click on the chapter on Capital Gains AND read the CRA bulletin on the subject which you can find at: http://www.cra-arc.gc.ca/E/pub/tp/it120r6/it120r6-e.pdf Very few tax people really understand this so be careful with your decision. For free, you will pay tax on the difference in the sale price of the building and what it cost you. The lot itself should be tax free. You will also have to collect GST on the sale of the new home. AND living in it for a month will NOT reduce your tax, it will increase it if the tax office goes after you. You should / must come out to one of the FREE Seminars as below: Every Thursday evening Fred Snyder and I hold a free seminar at Fred's office at 1764 West 7th (corner of Burrard in the Spence Diamond building) in Vancouver. The topics are: Seg funds and an alternative to the traditional RRSP. Making your mortgage income tax deductible Critical Care insurance for disasters. coffee and cookies of course. Phone 604-731-8900 to reserve your seat -and, you are welcome to bring your brother, your sister, your mother or father, your children, your best friend, your worst enemy or your own financial advisor who hasn't explained how to make your mortgage deductible. Another Seminar is starting in Victoria at 7 PM on Tuesday Nights. call 1-250-472-0700 to register. ========================== 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, Fred Snyder of Dundee Wealth Management and I, David Ingram host a 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 <http://www.600am.com/> Local calls are taken at (604) 280-0600 and Long Distance calls (BC only) are taken at 1( 866) 778-0600 Callers to the show are invited to attend free seminars on financial planning with such specialities as deductible mortgage interest. They are held at Fred Snyder's Office at 1764 West 7th in Vancouver - (604) 731-8900 for more information. ========================================= This from "ask an income tax and immigration expert" from www.centa.com <http://www.centa.com/> or www.jurock.com <http://www.jurock.com/> or www.featureweb.com <http://www.featureweb.com/> . David Ingram deals on a daily basis with expatriate tax returns with: multi jurisdictional cross and trans border expatriate problems for the United States, Canada, Mexico, Great Britain, the United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas, San Antonio and Houston Texas Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax and ImmigrationWizard Income Tax and Immigration Guru Income Tax and Immigration Consultant Income Tax and Immigration Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer consultant expatriate anti money laundering money seasoning FINTRAC E677 E667 4789 4790 TDF-90 Reporting $10,000 cross border transactions ========================= Alaska, Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Garland, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon. 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