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I am a Canadian citizen. I have been worked for a company in Mississauga, Ontario since 2016. Around this time my dad was diagnosed with illness so in March 2016, he added my name to his property in Markham, Ontario. I lived there for 3 - 4 months. Since it's bit of a drive to and from Markham and Mississauga, I lived with my brother closer to my work in Brampton, Ontario.

I decided to rent the property since I wasn't making enough money to pay the mortgage. In March 2018 I moved back to the property and I lived there for 6-7 months. I sold it in September of 2018 so I could buy a house closer to my work.

(I'VE NEVER EVER OWNED ANY PROPERTY BEFORE. THIS IS MY ONLY PROPERTY)

My parents bought the house in June 2007. My accountant is saying that I have to pay taxes on the capital gain from the property. To make things worse, he mentioned that because I did not buy the property from my parents and I was added to their mortgage, I became a 99% share holder. Therefore I have to pay tax on capital gains based on the date that my parents originally bought the property.

I've found one government page about renting a principal residence, but I find it very confusing. Can anyone help me with this?

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There is nothing confusing about this though it may feel unfair.

First, there is no such thing as a "primary property" in Canadian tax law. You seem to feel that if you only own one property, it's your primary property, and thus exempt from capital gains taxes. This is not correct.

There is a "principal residence." You can tell right away from the name what's going on here. You are expected to reside in your principal residence. The exemption is not for investment property or second homes, but for the home you live in. You never lived in this property. It's clearly not your principal residence. (There are some adjustments for people who move out for a while for good reasons, but that doesn't seem to apply to you, and I would expect your accountant to know whether it did or not and to be right about that.)

I have no idea why your parents felt you needed to own 99% of the house. I know parents/children who are on each other's mortgages and the one who doesn't live there is a 1% shareholder. (And I have witnessed such a 1% person being told by a lawyer they would have to pay capital gains on the 1% when the property sold or they came off the title.)

To answer your question, yes, you have to pay capital gains tax, you should listen to your accountant, and whatever lawyer wasted your parents' capital gains exemption by making you the 99% owner should not get any more business from you, unless at the time you told that lawyer you planned to live in the house.

  • Ah the joys of residing somewhere as opposed to owning it when it comes to tax! Once you get that down pat property tax is much simpler... – MD-Tech Apr 26 at 13:02
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    If you lived in it, moved out for employment reasons, and then moved back in then it might qualify, though I'm not your accountant. Your story doesn't have you ever living in it so I fail to see how you would qualify. That's what I was referring to in the () in the second paragraph. – Kate Gregory Apr 26 at 14:29
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    My apologies. I should have added much details as possible. My parents bought the house back in June 2007 and I lived with them though my high school and uni. then after my father's illness he added me to his property back in December 2015 and then I lived there fore 3 - 4 months before I moved and lived with my bother. At this time i did not purchase any other property. my salary was just enough to feed me and payoff my student loan lol. again I moved back to the property. March 2018 and sold it September 2018. So I lived in the house for about 6 -7 months again before I sold it. – Virushan Apr 26 at 14:44
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    OK so perhaps your accountant is as competent as the lawyer who put you on the mortgage. Perhaps a second opinion is in order. – Kate Gregory Apr 26 at 15:43
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    Its 57.2Km by car through 407 and 60Km by 401 takes 1h and 10min (one way) by car. and If i were to take public transportation i have to take 3 transportation and 15min walk which takes 2h 19min one way. I had to Travel from Markham rd and Steels Ave East to Queen St N and Britannia Rd W – Virushan Apr 26 at 18:19

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