Blog by Andrew Peck

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"What is the time restriction to avoid taxation on capital gains?"

"What is the time restriction to avoid taxation on capital gains?"

"My client has bought a new condo downtown and construction will be finished in a few months. In order to avoid to pay the tax for the capital gain, he is thinking to move in for a little while and sell it later. What is the time restriction for your own resident of a property for that? Meanwhile he may leave his existing resident apartment vacant while living in his new condo. He was told just need to live in a new place for 6 months and sell it without paying any capital gain. Is that true and where can I get the info?"

We can not give taxation advice as it is beyond your scope of knowledge. In general there are no written rules for these exemptions. The tax man will look at each case individually and if they believe there was not a true and sincere change of principle residence they can disallow the exemption. It has to pass their smell test. There are provisions under the Income Tax Act for a person to retain their original principle residence even though they don’t live in it.  Those cases happen when a person has been transferred to another place for their job. They can make application to keep their old home as their principle residence if they believe they will be returning.  Again, you need to seek expert advice on this.

Your client should seek advice from a chartered accountant on this as it is not an area of expertise we will give advice. If you wish general information, you can direct him to the Canada Revenue Agency and they will give you that information.

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