Girlfriend selling house in Quebec and Moving to Ontario

[investnoob]

Hello, my girlfriend just got a job in ottawa. She will be selling her house in Montreal as a result.

While the house is on the market, she will be living with me in Ontario - as of November 1.

For tax year 2009, how would she file her taxes? As an ontario resident? What if the house does not sell until 2010? Would she be considered a quebec resident?

If she changes her residency status to Ontario, would she have to pay capital gains tax on the sale of her home? (i.e., would it no longer be considered her primary residence).

I hope I make sense, any help you could give would be greatly appreciated.

[stardancer]

As long as she doesn't rent out her house, it is still her principal residence so no capital gains would be declared. If she does rent it out (say it doesn't sell for quite a time), then she has to go through a complicated procedure to prorate the Montreal address as her principal residence for a time and a rental the rest of the time. She would also have to report the rental income, net of expenses. But, cross that bridge when you come to it.

If she is living in Ontario on 31 Dec 2009, she would file as an Ontario resident. As such, she cannot use her PQ property taxes for the ON Tax Credit.

If there are no joint children involved, the two of you are not considered common-law until you have lived together for 12 months.

[investnoob]

Thanks stardancer.

She does not plan to rent the house. She wants to sell it. What i'm trying to figure out is...if she files her taxes as an ontario resident, will she have to pay capital gains taxes on the sale of her house in quebec? I'm not sure about that. The house will be empty when it gets sold.

[OhGreatGuru]

Thanks stardancer.

She does not plan to rent the house. She wants to sell it. What i'm trying to figure out is...if she files her taxes as an ontario resident, will she have to pay capital gains taxes on the sale of her house in quebec? I'm not sure about that. The house will be empty when it gets sold.

I think you are confusing her "province of residency on December 31" for tax year purposes, with her "principal residence" eligibility. If she owned and lived in the house for most of 2009, it still qualifies as her "Principal Residence" for 2009, even though she changed her residency at the end of the year. And as far as not being able to sell until 2010, the formula for calculating the capital gains exemption allows you up to a year of leeway in selling a principal residence. See CRA's IT-120R6.

[investnoob]

I think you are confusing her "province of residency on December 31" for tax year purposes, with her "principal residence" eligibility. If she owned and lived in the house for most of 2009, it still qualifies as her "Principal Residence" for 2009, even though she changed her residency at the end of the year. And as far as not being able to sell until 2010, the formula for calculating the capital gains exemption allows you up to a year of leeway in selling a principal residence. See CRA's IT-120R6.

Thanks oh great guru. That is exactly what i was trying to figure out.

If she can consider ontario her province of residence for tax purposes and still consider her house in quebec as a principal residence. It sounds like she can. I wonder is she will save taxes in the end. I'll have to fill out both forms for giggles to see if she does save money....

[ChrisR]

If there are no joint children involved, the two of you are not considered common-law until you have lived together for 12 months.

Is this an actual time line? I looked around and couldn't find any concrete definition of a common law relationship in Ontario.

In other provinces the time line is certainly different. In Manitoba a couple are common law if they have a) lived together in a conjugal relationship for 3 years, or b) lived together for 1 year and have a child.

[Maltese]

Is this an actual time line? I looked around and couldn't find any concrete definition of a common law relationship in Ontario.

In other provinces the time line is certainly different. In Manitoba a couple are common law if they have a) lived together in a conjugal relationship for 3 years, or b) lived together for 1 year and have a child.

It is my understanding that the definition of common-law for income tax purposes differs from some, if not all, provinces' definition relating to division of marital property upon breakup of the union.

With the definitions differing it is no wonder that the result is often confusion.

[Berubeland]

In Ontario common law is 1 year or whenever your child is born.