Change in use from personal-use to income-producing

[cmontminy]

I would like to know what is best to do in my situation.
I own a property in Cold Lake, Ab and in October 2009 I relocated to Fort Mcmurray for work and was renting an appartement until March 2010 when I bought a condo here in Fort Mcmurray while I still kept renting my residence in Cold Lake.

Now I would like to know if it is better for me tax wise to use the "no change in use" election with the Canada Revenue Agency or to do the "change in use" and pay the capital gain as it says in this articles ( A change in use will generally cause a deemed disposition of the property (or a portion of it) at fair market value under Canadian tax law. If the property has appreciated in value, there may be tax to pay on the capital gain)

I would like to have inputs on what is best to save taxes.


Thanks

 

[Albertritchot]

From the time you resided in your Cold Lake house (when it was your principal residence), you do not have to pay capital gains tax. It`s only once you start renting it that a capital gain or loss may occur.See this link:


http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/nc...s/menu-eng.html


If the property was your principal residence for any year you owned it before you changed its use, you do not have to pay tax on any gain that relates to those years. You only have to report the gain that relates to the years your home was not your principal residence

For this reason, you only have to worry about a capital gain that would have occurred from 2009 (when you started to rent it) till March 2010. You might want to record what was the Cold Lake`s market value at the time it converted into a rental property. This will become the cost from which a capital gain or loss can be calculated when you eventually sell it.