THE definition of "Principal Residence"...!
...By simple deduction or consequence of Capital Tax Gain
Ask a tax expert
If l rent one condo and buy another, which is my principal residence?
Globe and Mail Update
Published Thursday, Nov. 30, 0002 12:00AM EST
Last updated Tuesday, Apr. 24, 2012 11:15AM EDT
Right now I'm renting the condo that I live in. I don't have any desire to be a homeowner just yet, due to the higher maintenance associated with it but I was thinking of buying a condo as an investment property - buying it early pre-sale and then selling after. My question is: Which condo should I list as my principal residence? In other words, if my investment condo is the only property that I own, is it possible to list it as my principal residence, even though I actually live in another condo that I rent? I would like to see if I can avoid capital gains when I sell.
This issue can be complex. Let me try to break it down for you: First, you should know that designating a property as your principal residence (to shelter the sale from tax) doesn't require that you live in the property for any particular period of time. Some people think that one year is the magic number. Not so. There is really no prescribed time frame. I've seen some people call a second property their principal residence even though they live in the property for a week or two a year.
Here's the bigger issue: You can only designate a property as your principal residence if it is a “capital property.” That is, if CRA looks at your situation and considers the condo (the one you hope to flip for a profit) to be more akin to business inventory (that is, the CRA doesn't believe your intention was to ever hold the property for any length of time to either live there or rent it out; rather that your intention was always to flip it for a profit), then the condo won't be considered “capital property” and any profit will be taxed as business income. This is called an “adventure in the nature of trade.”
In order to be successful at designating the condo as your principal residence you'd have to live there for some period of time, but more importantly, you'd have to convince CRA that it was your intention to hold the property and live there rather than flip it. So, the longer you can own the property and live there, the better your argument that you should be able to call it your principal residence. If you choose to rent out the condo rather than live in it, you may be able to argue that any profit should be taxed as a capital gain (not as business income), but this won't entitle you to designate the property as your principal residence.
Globe Investor columnist Tim Cestnick has been answering one reader question online each week in the runup to the filing deadline. Mr. Cestnick is president and CEO of WaterStreet Family Offices and author of 101 Tax Secrets for Canadians. This is Mr. Cestnick's last answer. Thank you for your questions - we are sorry he could not answer all of them.
For stories, videos and tips about taxes, be sure to visit the Globe Investor Tax Centre website for daily updates.
...Your principal residence is for your first option of usage be it yours or not...!
...IN LATINO AMERICA and countries as problematic and third to fourth World countries as Venezuela: you can define in Registry Office your main home being yours entirely with no credit on it or other issues...! the house has to be yours though, and you cannot divorce during the validity in registrars office...!
...The government of Venezuela currently does provide some housing for the poor...!
...A foreclosure, is a "peasantry" result of somebody not being able to get any more work, has a mortgage, and the government will not give welfare, as "the government does not finance a house"...! this is worse than Venezuela even under Chavez...!
...you do your logic, or apply your crappy logic rules...!
... peasantry is your degradation as a human to rental to a land lord that gets your money from welfare which means: THE GOVERNMENT COULD BUY YOUR HOUSE "ONCE", THAN PAY ALWAYS THE LAND LORDS OF PEASANTS...! Utterly the Government is in contradiction, and proves they are the ones that make "peasants" and rich land lords...!
...your own house is a "sociual class privilege"...! do not ask a "capitalist" american anything about this...!
...english peasantry is as bad and low socially as any third or fourth world country...! SO WHERE IS THE BETTER OF CANADA OR USA ? Banks and Government, wake up ...!
...A BANK RATE LOAN RISE IS NOT THAT THEY "NEED IT" OR "CANADA NEEDS IT", it is only a speculative procedure to do just that: brake a whack of more new peasants, and make a few more land lords...! THERE IS NO OTHER SANE REASON...!
...additionally during principle residence you cannot law suit it in latino america...!
...in pure logic you can law suit any land lord and their "extra property"...! but you would not want to leave them on the street, so you do not law suit their principle abode...!