MacKay & McLean Discuss Rules Around Paying Capital Gains on Property
Questions often arise as to whether a one must pay capital gains on the sale of their property.
The general rule is that one does NOT pay capital gains on the sale of their “personal” residence.
What constitutes a “personal” residence is usually straight forward but it can get complicated, e.g. you own a house in the city and a cottage. What happens if they both get sold within the same year?
Other common questions, what if I build a home as a personal residence but sell it before I move in? What happens if I sell my personal residence, property ‘A’, and then sell my subsequent personal residence, property ‘B’, in the same year? What if I built a property but put tenants in it for the first year and then move in and lived there fore a year?
Everyone should get specific legal advice for their particular circumstances. However, please refer to Canada Revenue Agency’s (CRA’s) pamphlet for general information.
The safe play is to ask CRA for a ruling prior to the sale of the subject property.