In Canada, there are several important things that individuals need to be aware of before planning to compete in the dangerous real estate market. Selling your home is a big decision to make, but doing so without first considering all of the implications is a bad move. There might be a pretty sum attached to the concept, and the market is in excellent condition for sellers currently—however, the regulations and laws have changed in recent history, so there are definitive kinks that must be sorted out before the process can be at all beneficial.
What Are The New Rules?
Though the majority of the regulations deal with non-resident investors and not Canadian citizens, there are some aspects that seriously impact current and potential home owners in Canada. The individuals who have forgotten to pay their principal residence taxes at any prior point are in danger of causing a ruckus with this process, and must make sure they have reported the issue on the schedule three capital gains of the T1 income tax and benefit return. The requirements extend to all the way up to property dealt with in January of 2016, and effects on taxes are kind of impressive.
What Implications Exist?
If the home in question is actually your principal residence and you designate it as such on the return for the entirety of the time that it was your primary place of residence, then the tax on the profit is waved. You do not have to pay taxes on the profit from the property. That being said, only on property can be listed as the primary residence, so if you sell multiple properties, you will have to pay capital gains tax on at least one of them.
You may find that this particular stipulation does not seem to fit with your personal situation, whether that means you lived primarily at multiple locations or what. The tax forms offer the option of paying tax on a portion of the property profit instead, which can mean an undetermined amount. This requires certification and examination prior to knowing exactly how much will have to be paid in taxes on the partial profit for the home.
Is It A Good Idea to Sell?
Feasibly, yes. If you are selling your primary residential location, the tax benefit is an excellent option This new regulation is a quality perk for helping the market become less aggressively volatile.