How to Sell Your Condo in Vancouver 2: Taxes on the Sale Proceeds of your Home – Is it a Principal Residence?
In Episode 1 of How to Sell a Vancouver Condo we discussed how its important to speak to your lender about mortgage penalties when deciding when to sell your Vancouver condo.
There may be Taxes PAYABLE on the Sale Proceeds of My Condo?!
In many cases, the answer unfortunately may be yes!
Today we’re going to talk about the taxes that may be payable on the proceeds of the sale of your condo.
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A nasty surprise may come tax time, months after you have sold the condo, when Capital Gains Tax (typically 50% of the net profit on the sale – CONFIRM with your Accountant!) may be payable on the increase in value of a property that was sold.
Is the Condo You Want to Sell a Principal Residence? Is it a Rental Property? Is it a Vacation Property?
The condos I help clients sell in Vancouver are either Primary Residences, Rental Properties, or Vacation Homes. To get a clear idea of exactly how the Canada Revenue Agency views your property and how much tax is payable, if any, ALWAYS consult an accountant before selling a property in Vancouver.
If the condo you’re selling is your Principal Residence, this property may well be exempt from Capital Gains taxes on any increase in the properties value during the time you owned it.
What is a Principal Residence?
According to the Canada Revenue Agency page on the topic, a Principal Residence must be:
- Owned by the taxpayer
- “Ordinarily Inhabited”
- Be a housing type that qualifies (Condos do)
- Be designated by the taxpayer as a Primary Residence.
*** (Remember – I am not an accountant and I am not giving tax advice, please confirm all these details with your accountant!) ***
CRA Principal Residence Definition
So remember, when you’re thinking of selling a condo in Vancouver make sure to check with your accountant to see if there is any Capital Gains taxes payable. Nobody likes nasty surprises come tax time!
With Holding Taxes? 25% of the Sale Proceeds can be Held by the Buyers Lawyer on the Sale of Non-Resident Owned Properties?
Sometimes YES! CRA may apply With Holding Taxes!
If you’re a non-resident owner of property in Canada you may need to get a Tax Clearance Certificate from the Canada Revenue Agency which could take anywhere from 4-6 weeks from the time you list the property.
If the Clearance certificate is not received by the Completion Date of a sale, the Buyers lawyer could possibly hold back 25% of the gross proceeds (ie the money you get for your property!) of the sale until the buyers lawyer receives the Clearance certificate!
*** Always call an accountant before you sell a property! ***
Be Sure to Check Out Episode 3 of How to Sell a Condo in Vancouver 3: How Much is My Vancouver Condo Worth?
Questions on Taxes and Vancouver Real Estate? Check out these Informative Videos on Taxes on Buying and Selling Properties in BC!
Looking for Advice on Buying Your Next Property? Check out these Great Videos with lots of Home Buyers Advice!
I STRONGLY ENCOURAGE QUESTIONS & COMMENTS BELOW!!