Investor · Toronto, Ontario · Member since 2017 · 9 posts · 1 vote
Hi everyone,
I'm considering selling one of my properties next year but would like to sell as principal residence to avoid capital gains tax. What documentation/proof do I need to provide CRA as means of proof?
Ex.
- drivers license
- bills (gas/hydro)
Of course I would have to move in to this property as well. Could I still have a lease and tenants living with me?
@Jan Walczak It sounds like you haven't been living in this property. If you move into it for a year and used it as a rental for 9 years (picking random numbers), when you file your taxes you state this on the form and will pay capital gains on the 90% of the profit (it doesn't work out to 90% as there are some other steps, but you get the idea). it is based on calendar years, so if you moved in from Dec-June, that would count as 2 years (2019 and 2020). Call CRA with the scenario and they will explain it.
@Jan Walczak It sounds like you haven't been living in this property. If you move into it for a year and used it as a rental for 9 years (picking random numbers), when you file your taxes you state this on the form and will pay capital gains on the 90% of the profit (it doesn't work out to 90% as there are some other steps, but you get the idea). it is based on calendar years, so if you moved in from Dec-June, that would count as 2 years (2019 and 2020). Call CRA with the scenario and they will explain it.
Investor · Toronto, Ontario · Member since 2017 · 9 posts · 1 vote
6y
@Theresa Harris Thank you for clarifying. This particular property has been a rental for less than a year. So to your previous note in a different situation there may be no point of moving if that property has been rented for a very long time. Going back to my question regarding documentation. If all a persons documentation, health card, drivers license, bills, all is connected to that address could he/she in theory claim it as principal residence? I'm inquiring into how CRA do their due diligence.
@Theresa Harris Thank you for clarifying. This particular property has been a rental for less than a year. So to your previous note in a different situation there may be no point of moving if that property has been rented for a very long time. Going back to my question regarding documentation. If all a persons documentation, health card, drivers license, bills, all is connected to that address could he/she in theory claim it as principal residence? I'm inquiring into how CRA do their due diligence.
I don't think there is a clear cut answer of what you are asking for. It would have to be from someone who got audited.
If I were the CRA I would look at all your properties designated the one where your drivers license mailing address goes to and how long was it registered to that address. Because lets say you changed it today but and sold the property next year but owned it for say 5 years previously. They may question why didn't you change it effective immediately after you moved in etc.. Just throwing out hypotheticals
@Theresa Harris Thank you for clarifying. This particular property has been a rental for less than a year. So to your previous note in a different situation there may be no point of moving if that property has been rented for a very long time. Going back to my question regarding documentation. If all a persons documentation, health card, drivers license, bills, all is connected to that address could he/she in theory claim it as principal residence? I'm inquiring into how CRA do their due diligence.
I don't know. One quick way for them to check is your address on your income tax returns.