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Thread: Tax Advice - Sold Rental that was Previous Primary

  1. #1
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    Default Tax Advice - Sold Rental that was Previous Primary

    I understand that I need to claim capital gains on the increase of value on a sold rental property. We owned it for 11 years and rented it out for the last 3 years
    Which situation is right?
    A. The capital gain is 3/11 of the difference between the purchase and sale prices
    B. The capital gain is the difference between the assessed value between when we started renting and when we sold it.

    We never claimed the CCA or whatever when we rented it, not sure if that makes a difference. I could ask an accountant, but where is the fun in that
    Last edited by dirtsniffer; 05-14-2022 at 10:12 PM.

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    Pick whatever method works out to less tax oweing and let'er buck. Cross one finger for a few years. Works 80% of the time

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    I'd pick B.
    Probably less tax choice.

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    B.
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    I think you have to do B. Or youre suppose to.

    Govern yourself accordingly.

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    B is the proper way. When you change from primary to rental you should take an assessment of the property at the time.

    - Not accounting advice - You could use the city's assessment to extrapolate the value, but talk to your accountant.

    I.e. bought for 200k and sold for 400k.
    2010 city assessment is 175k
    2018 assessment was 325k
    2021 assessment is 360k
    So 185k gain over 11 years but 150k of that was while it was primary residence. 150k / 185k is 81%.

    Then using real numbers because the city is junk. 400k - 200k = 200k gain x 81% is 162k gained while a primary residence. That leaves 38k gained as a rental.

    So you'd claim 38k capital gain

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    That's what I was thinking (and hoping) as well. As the assessed value across all three years is practically flat

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    B is the correct answer. You should have filled out a form T2091 on your tax return for the year you started renting it and it should have been fair market value that you noted on that form. You could use assessment but usually those are lower than actual fmv, so you could end up screwing yourself for higher capita gains if you do that.

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    Quote Originally Posted by sabad66 View Post
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    B is the correct answer. You should have filled out a form T2091 on your tax return for the year you started renting it and it should have been fair market value that you noted on that form. You could use assessment but usually those are lower than actual fmv, so you could end up screwing yourself for higher capita gains if you do that.
    Interesting. The year we moved and elected to rent our condo I hired out the taxes to an accountant but I don't remember filling out that form... Maybe they knew that condos are such shitty investments I'd never have any capital gains to worry about

    I was ready to list last month as we had 2 units that sold right before the first rate increase at or above what we paid in 2011. The last 2 that have sold were way under including the former showhome that sold for $20k below those earlier this month... I assume the 2 higher ones were outliers and a result of people scrambling to buy before rates went up. Sucks cause I still own a condo, sigh.
    Originally posted by killramos
    It's a Chrysler, it won't last long enough to depreciate.

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    Quote Originally Posted by Pauly Boy View Post
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    Interesting. The year we moved and elected to rent our condo I hired out the taxes to an accountant but I don't remember filling out that form... Maybe they knew that condos are such shitty investments I'd never have any capital gains to worry about

    I was ready to list last month as we had 2 units that sold right before the first rate increase at or above what we paid in 2011. The last 2 that have sold were way under including the former showhome that sold for $20k below those earlier this month... I assume the 2 higher ones were outliers and a result of people scrambling to buy before rates went up. Sucks cause I still own a condo, sigh.
    If you use tax software or accountant it might not be blatantly obvious that you filled the form. But if you look at the final pdf it should be in there.

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    .
    Last edited by msommers; 05-20-2022 at 12:42 PM.
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