Tax Question, selling a new home that was never lived in

[ATTS]

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Quick synopsis is...We bought a new construction house that is going to be ready this September however something has changed in the layout of the houses and roads which the builder is now letting us walkaway from the deal if we want. We were going to sell our current house and move into the new house but we don't like the changes. The two options we are looking at is to walkaway (full deposit returned) or to keep it and when it is finished being built to sell it for the then going rate (increase over what we paid). I am thinking about keeping it and selling it without moving into the house.

The tax question I have is...do we have to pay capital gains tax on the "new" house if we just sell it without living in it? Since we never lived in it and have two homes I am not sure if they would consider this an income property. If so anyone know the tax rates? I searched quick on the CRA site but don't have the time right now to read through the whole section.

Thanks.

 

[Gary]

Quick synopsis is...We bought a new construction house that is going to be ready this September however something has changed in the layout of the houses and roads which the builder is now letting us walkaway from the deal if we want. We were going to sell our current house and move into the new house but we don't like the changes. The two options we are looking at is to walkaway (full deposit returned) or to keep it and when it is finished being built to sell it for the then going rate (increase over what we paid). I am thinking about keeping it and selling it without moving into the house.

The tax question I have is...do we have to pay capital gains tax on the "new" house if we just sell it without living in it? Since we never lived in it and have two homes I am not sure if they would consider this an income property. If so anyone know the tax rates? I searched quick on the CRA site but don't have the time right now to read through the whole section.

Thanks.

On a "flip", it's ~20% on the 1st $100K of profit if you claim it Paul.

 

[killerkeith]

Take your deposit and find another home. You don't stand to make very much more than what the builders are selling them for.

 

[OpenGambit]

Quick synopsis is...We bought a new construction house that is going to be ready this September however something has changed in the layout of the houses and roads which the builder is now letting us walkaway from the deal if we want. We were going to sell our current house and move into the new house but we don't like the changes. The two options we are looking at is to walkaway (full deposit returned) or to keep it and when it is finished being built to sell it for the then going rate (increase over what we paid). I am thinking about keeping it and selling it without moving into the house.

The tax question I have is...do we have to pay capital gains tax on the "new" house if we just sell it without living in it? Since we never lived in it and have two homes I am not sure if they would consider this an income property. If so anyone know the tax rates? I searched quick on the CRA site but don't have the time right now to read through the whole section.

Thanks.

If you do sell it and you do sell it for more than your adjusted cost base, you would receive a capital gain, of which 50 % is taxable as income based on your personal income tax rate.

However, if you are found to be flipping property as a business, then it would be treated as income and 100 % of it would be taxable as income based on your personal income tax rate.

all of that being said, there are other things you can do to mitigate the tax, which may come with risk, but I suggest you talk to your personal tax advisor.

 

[LiNK666]

You might not want to take this advice but I know others who have.

Claim separation with your spouse. Have the house in her name and sell the house as her primary residence. /end

 

[nfq]

You might not want to take this advice but I know others who have.

Claim separation with your spouse. Have the house in her name and sell the house as her primary residence. /end

This scenario may just lead to a Real separation lol

 

[webb70]

Take your deposit and find another home. You don't stand to make very much more than what the builders are selling them for.

Not true if the house is in Milton.
As most houses are sold by the builder 12-18 months before "move in", the houses sell for considerably more once ready.....

 

[jawan]

If you do sell it and you do sell it for more than your adjusted cost base, you would receive a capital gain, of which 50 % is taxable as income based on your personal income tax rate.

However, if you are found to be flipping property as a business, then it would be treated as income and 100 % of it would be taxable as income based on your personal income tax rate.

all of that being said, there are other things you can do to mitigate the tax, which may come with risk, but I suggest you talk to your personal tax advisor.

+1...pm if u have any questions I'll be happy to answer any q's/scenarios.

There are other things to consider, spousal income, family, dependants etc, who will be on title etc... If it is your first house that this has happened to then it will be easy to argue it was an investment. After your first home it gets harder to prove it is not your business.

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