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08-16-2010, 11:36 PM
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#1
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Proud to be called a RS Regular!
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HST Question: Buying a second home
I'm considering buy a second condo, about $260k. I will move into it and rent out my current condo.
How much will I have to pay in hst? I believe there are some rebates available for a primary residence- would I qualify for this, even tho it's a second residence?
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08-17-2010, 07:40 AM
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#2
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Banned (ABWS)
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OT: Have you thought of the tax implications of changing primary residences?
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08-17-2010, 07:53 AM
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#3
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HELP ME PLS!!!
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isn't HST only on houses over 400k? and brand new houses. so if you buy a used condo for 260k I don't think you'll pay anything.
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08-17-2010, 08:23 AM
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#4
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Rs has made me the man i am today!
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there aren't any tax consequences until you sell.
you can assign either property as your primary residence when you sell. let's say you sell property #1 in 2011. then property #2 can become the primary residence starting in 2011.
tax calc:
gain x [(years as your primary residence + 1 year)/years owned]
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08-17-2010, 08:27 AM
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#5
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Rs has made me the man i am today!
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08-17-2010, 08:48 AM
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#6
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Proud to be called a RS Regular!
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Quote:
Originally Posted by taylor192
OT: Have you thought of the tax implications of changing primary residences?
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Yea, as someone posted, I didn't think there were any implications til sale time.
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08-17-2010, 08:51 AM
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#7
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Banned (ABWS)
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Quote:
Originally Posted by votrechien
Yea, as someone posted, I didn't think there were any implications til sale time.
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As long as you do your homework at time of transfer of principal residence. You need to establish FMV now, or else might get screwed later.
Otherwise you have to use the formula in the taxtips link, and in a declining/flat market that Vancouver will probably be for the next 5-10 years, you could end up paying more capital gains than you should.
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08-17-2010, 10:20 AM
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#8
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Rs has made me the man i am today!
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why do you have to establish fmv?
isn't it proceeds of disposition - cost = gain ?
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08-17-2010, 11:47 AM
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#9
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Banned (ABWS)
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Quote:
Originally Posted by waddy41
why do you have to establish fmv?
isn't it proceeds of disposition - cost = gain ?
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Consider this:
Bought in 2005: $200K
FMV in 2010: $300K
Sold in 2015: $300K
Owned 2005-2010
Rented 2010-2015
Based on the formula from taxtips, he would owe capital gains on:
($300K - $200K) * (5 / 10 ) == $50K
When he should owe $0 capital gains cause the property did not increase in value while it was a rental, and the $100K gain should be protected as his tax free primary residence.
If instead he got an appraisal done he could claim the FMV of the property was $300K when it changed use from primary to rental. I've read this is usually good enough, yet if you were to be audited it would be best to establish an amr's length transaction to sell the house then rebuy at $300K in 2010, thus absolutely establishing the unit as only a rental.
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08-17-2010, 12:49 PM
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#10
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NOOB, Not Quite a Regular!
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U don't need HST if the condo is not brand new.
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