We bought our home in 1996. We moved to the US, declared US residency (L1/L2 visas) for work and rented it out from mid 2002 to the end of 2005. We are returning to Canada, into our home in the beginning of 2006, and are considering selling it in 2006 or 2007.
I am curious how the capital gains are calculated for the period that it was a rental. If we sell in 2007, we would have owned it for 11 years and rented it for 2.5 years during that time. Could the taxable capital gain be simply the increase in value multiplied by 2.5/11? Or is it much more complex?
Are any lifetime capital gain deductions that can be applied?
Also, is there a minimum time that we would reside in tha house to avoid those capital gains... or am I just wishing too much
mabajada
Capital Gain on Canadian House
Moderator: Mark T Serbinski CA CPA
The formula, as you will see when you fill out the forms, is
reportable gain = Total gain * (PR+1)/T.
where
PR = is years it was your principal residence (and you were Cdn resident)
T= total years you owned home
if you use months, the formula becomes (PR+12)/Months
In other words, CRA gives you a bonus year of taxfree capital gains.
An alternative would have been to accurately determin the value when you left canada and when you return, and pay tax on the gain for that specific period.
I would think the first way would work out best.
You will always be on the hook for some gains. There is no exemption for the years you are talking about, the exemption came and went in the 80's.
Had you remained a Cdn resident, and moved out of your house and then returned, you could have done this for 4 years I believe without incurring cap gains (if you returned to home for some period before selling), but this does not apply to those who changed the use of the home due to non-residency.
<i>nelsona non grata... and non pro</i>
reportable gain = Total gain * (PR+1)/T.
where
PR = is years it was your principal residence (and you were Cdn resident)
T= total years you owned home
if you use months, the formula becomes (PR+12)/Months
In other words, CRA gives you a bonus year of taxfree capital gains.
An alternative would have been to accurately determin the value when you left canada and when you return, and pay tax on the gain for that specific period.
I would think the first way would work out best.
You will always be on the hook for some gains. There is no exemption for the years you are talking about, the exemption came and went in the 80's.
Had you remained a Cdn resident, and moved out of your house and then returned, you could have done this for 4 years I believe without incurring cap gains (if you returned to home for some period before selling), but this does not apply to those who changed the use of the home due to non-residency.
<i>nelsona non grata... and non pro</i>