I would say the principal residence exemption still applies. Although the property took longer than hoped to sell, one could show that the INTENTION was to sell pretty much immediately (I assume that`s the case and can be backed up by realtor listings, advertizing, etc). Additionally, there was no other use for the property from the description, it sat vacant the whole time (might be different if it was rented out in the in between times).
QUOTE (Davidchien @ Nov 23 2010, 11:47 PM)
Hi :
I need some clarification regarding this principle residence question.
Some one asked me that if they moved into a new home in Oct. 2009 and attempted to sell their former (vacant) home un-successfully for over a year. Does the capital gain tax apply if the home was sold after Jan. 2011 ?
Hi David
I'm not an accountant, but I think you will find that they can claim the gain on one or the other of the residences but not both for the overlapping period. They will have to decide which is to their greater advantage. How that distinction is made is another thing. They may have to get an opinion letter from a realtor or appraisor for the respective changes in value of both properties over that time; just in case CRA askes questions.
You will be able to get an definite answer from the accountants, and lawyers here.
Hi :
I need some clarification regarding this principle residence question.
Some one asked me that if they moved into a new home in Oct. 2009 and attempted to sell their former (vacant) home un-successfully for over a year. Does the capital gain tax apply if the home was sold after Jan. 2011 ?
Hi David
I'm not an accountant, but I think you will find that they can claim the gain on one or the other of the residences but not both for the overlapping period. They will have to decide which is to their greater advantage. How that distinction is made is another thing. They may have to get an opinion letter from a realtor or appraisor for the respective changes in value of both properties over that time; just in case CRA askes questions.
You will be able to get an definite answer from the accountants, and lawyers here.
Interpretation Bulletin IT120R6 offers some information regarding principall residences. In particular, #10 explains how a person can have two principal residences at the same time in a particular year.
http://www.cra-arc.gc.ca/E/pub/tp/it120r6/it120r6-e.pdf
Hope this helps.