Imagine how excited you were when you purchased your first home! It is a huge accomplishment and also one of your largest investment you make. We have come across many clients that run into issues when they sell their home. Therefore, it is best to think about all the potential consequences of something you would think be simple as selling your home like many other individuals.
Before, you sell your home here are some things to keep in mind.
1) Do you have other properties? When you sell your home, you should consider the tax consequences. You should ensure you speak to your accountant and ensure they they claim principal residence for the appropriate property.
2) How long have you had the home? The CRA has been cracking down on individuals who sell their home too soon, considering that they are in the business of "flipping" homes, especially if they have another property. In this case, the CRA may treat the gain on the sale of the property as business income rather than capital. This can be a huge impact on individuals because instead of 50% of the gain being taxed for capital gains, the entire gain would be taxed at the applicable personal tax rates. If you owned the home for a short period and considering to sell, you may want to think about renting it out for at least a year before you sell. But this depends on your financial situation or needs.
3) HST Impact on New homes. If you sell your home too soon, you may be required to pay the CRA for the HST rebate you would get on buying a NEW home if they feel that you were "flipping" your home. If this is your principal residence, there is no holding period requirement for your home to retain the rebate, however, the CRA will review the sale of the home sooner on a case by case basis. Make sure you keep all your records in order, such as utility bills, change in address, etc.
If you need more information and require consulting on the sale of your home, please contact an MP Group professional.