# are there capital gains on this situation?



## doug1966 (Oct 13, 2012)

Hello,

In 2007, I separated from my wife, moved out of the house and bought a condo nearby. I then listed the condo as my principal resident on my taxes. Three years later my wife and I kissed and made up, I moved back to the old house and we have been renting the condo for the last two years. 

We are thinking of selling the condo but wondering how we would be affected by the capital gains tax. I.e, Do I get some "credit" for this property being my principal residence for three years?

Thanks,

Doug


----------



## Square Root (Jan 30, 2010)

Yes


----------



## themortgageguy (Jun 28, 2012)

doug1966 said:


> Hello,
> 
> In 2007, I separated from my wife, moved out of the house and bought a condo nearby. I then listed the condo as my principal resident on my taxes. Three years later my wife and I kissed and made up, I moved back to the old house and we have been renting the condo for the last two years.
> 
> ...


I think you would but here are the sticky points:

1) You can only have one principle residence at a time. Therefore if the condo was your personal residence the house cannot be. For the three years you were in the condo the capital gains attributed to that time should be negated by the principle residence deduction.

2) when you moved back in with your wife and started renting the condo, you had a deemed disposition of the condo at FMV effectively setting its acquisition price for its future sale.

3) I don't know what and if there are any ramifications for you declaring the home NOT to be your principle residence for the three years. I suspect it will take matters into account such as who was on title at the time etc.

I'm not a tax professional so you need to go see one if you really want to follow up on this. Also revenue Canada has a concise explanation booklet on the principle residence deduction on its site


----------



## Cal (Jun 17, 2009)

Yes, good adice thus far. Pick up a phone call an accountant and I am sure they will be able to give you professional advice.

Congratulations on working things out with your wife!


----------



## doug1966 (Oct 13, 2012)

Cal said:


> Yes, good adice thus far. Pick up a phone call an accountant and I am sure they will be able to give you professional advice.
> 
> Congratulations on working things out with your wife!



thanks for the great advice mortgage guy and the congrats!


----------



## kcowan (Jul 1, 2010)

Doug
I think you need to run the scenarios to see what is best for you then consult a tax accountant to see whether that approach is defendable to the CRA. The CRA is on record as treating married people that separate and unmarried people who cohabit in a capracious fashion. So whichever approach you select, you must be prepared for a potential fight...Keith


----------



## sprocket1200 (Aug 21, 2009)

there are only gains if you changed your principle residence back. your 'roommate' can net you a healthy profit...


----------

