Capital Gains on partially rented units

[cdr108]

thanks for starting this discussion. I'm a little unclear about the terminology above, so forgive me if you answered it above..

Getting back to the issue of capital gains on a rental property, if it was my principal residence for 10 years, and then I rented it out for the next 10 years before selling, would I be able to reduce my capital gains taxes upon selling for the time it was my principal residence? What about the opposite scenario--renting it out for the first 10 years, and then living in it for the next 10 years before selling? Seems unfair to not get credit for the time it was PR.

anytime there is a change in residency from PR to rental, or v-v, CRA considers the property to have been disposed of, so it crystalizes a value.

any CG while PR is tax free, while any as rental is subject to taxes

ps - i should add, any CL while PR is NOT deductible, while any CL as rental can be used for CL to offset CG.

 

[adeel]

anytime there is a change in residency from PR to rental, or v-v, CRA considers the property to have been disposed of, so it crystalizes a value.

any CG while PR is tax free, while any as rental is subject to taxes

+1 couldnt have said it better myself

 

[ponyboy]

thanks for that.

so, is this value that CRA crystallizes taken from MPAC assessments since the property that has changed use (e.g. from PR to rental) has not changed ownership?

My actual case is: I own a house with three apartments, and have lived in one unit for 10 years (50% of floor space and value). I plan to move out soon and will rent all three units until I sell the property some day. If I sold in 10 years, what you say suggest that I can reduce the cap gains for the first 10 years appreciation of the property by 50% reflecting my 50% PR use. Is this correct?

thanks for the input, and I hope this is of use to others on this forum besides me!