How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Barbara Your Own Question
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3371
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
71603090
Type Your Tax Question Here...
Barbara is online now
A new question is answered every 9 seconds

I own a townhouse for 3.5 years on which I have a mortgage

Customer Question

I own a townhouse for 3.5 years on which I have a mortgage and I own a second house that is during construction since 2010. I put my townhouse for sale in 2016, and was planning to move to the second house ( so it will be my primary residence) and sell it in 2017. Unfortunately, the townhouse did not sell and now I'm facing selling two houses this year. I am separated for more than 3 years and I lost my job two years ago. I can not afford to pay any longer mortgage on the townhouse and 1/2 of mortgage on the second house on which I am a co-owner with my husband. We were planning to sell the house that we both own and then divorce or divorce while I'm living there, then sell it. I am 61 years old and live by myself. All my investment (if any) I have in these houses, so I would like to know what is the best option for me to pay less in taxes, so I could have money for my retirement. Thanks for your advice.
Submitted: 6 months ago.
Category: Tax
Expert:  Barbara replied 6 months ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

When you sell your home, you may realize a capital gain. If the property was your principal residence for every year you owned it, you will not pay any capital gains tax. Starting with the 2016 tax year (due in 2017), you will have to report basic information of the sale on your tax return.

You’re only allowed to designate one home as your principal residence for a particular year. If you’re unable to designate your home as your principal residence for all the years you owned it, a portion of any gain on sale may be subject to tax as a capital gain. The portion of the gain subject to tax is based on a formula that takes into account the number of years you owned the home and the number of years it was designated as your principal residence.

To help you make this designation, you should determine the fair market value (FMV) of each home.

If you sell both homes in the same year and one is designated as your principal residence, 50% of the gain from the sale of the other residence will be subject to tax at your individual tax rate.

http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa11-eng.html

Please let me know if I can assist you further.

Thank you and best regards,

Barb

Expert:  Barbara replied 6 months ago.

Just following up with you to see if you have any other questions or concerns. If so, please let me know so I can further assist you.

Thank you.

Barb