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Principal Residence - Capital Gains

I have a client, last April him and his girlfriend bought a house in April. They are now separated and will be selling it. The price has gone up about $100,000. There was no intent on flipping. My take is that because it was their principal residence, there should be no capital gain, even though they owned it less than one year.

Am I correct?
TIA
Gerry

What was their marital status before moving into the house? Were they established as a common law couple? Will they have been separated for 90 days or more on Dec 31/2020?

Selling a principal residence due to marriage breakdown doesn’t give rise to taxable capital gains, the way that flipping does.

Correct.
Ensure you fill out the T2091 on their taxes. I have seen similar situations, and CRA didn’t question it. But, if one of them sells another property, within a year or two, CRA may be more likely to investigate.

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They were not even together for a year. They jumped the gun, they were both recent widows, got together, bought a house and then separated within a few months of purchasing.

Gerry

They are both females?
(https://www.dictionary.com/browse/widow?s=t)

In any event, since each of them has a tax status as “single”, it was not actually “their” anything.
(Or, even maybe not that “single”, depending on how recent the death of the former spouses was…)

Firstly, one would need to examine the source documents, Land Titles certificate etc, to see what the real legal status of each of their individual ownership was. (Tenants-in-common?)

Then one needs to deal with each individual separately to determine the tax factors that may apply in each case. The individuals may very well have very different tax situations.

Hi Gerry, you may take a look recent tax case regarding principal residence. It gives you hints how CRA challenged people claiming principal residency and factors the judge considered regarding claiming principal residence.

@joe.justjoe1 What possible reason would there be to question if they are both females? This is 2020, not 1950. Providing a link to the dictionary definition of widow simply adds to the insulting nature of your question.
Please stick to just answering the question asked - you provide very good, very detailed (and to the letter of the law) answers. It would be nice to not have them include sarcasm and constant grammar corrections.

Some of us have studied English beyond primary levels and strive to use the language correctly.

It us unfortunate that correct usage of one of the official languages of this country can be so offensive to some.

Correct usage of a language is encouraged as a prime basis of professionalism.

Since the OP did not raise specific issues of S248 definitions for ITA purposes, the least we can do is to strive to use correct English to aid in some measure of clarity in the facts of the case.

You missed the point - it could very well be two widows. Who says it has to be a widow and a widower?

I read carefully.
If you re-read, you will see what you missed, and you will see the English error.

And thank you for abundantly illustrating what happens when there are language errors.

@dklassencga, @gerry was not precise with his use of language; a widow is never a “him.” While not relevant to the topic, it does illustrate why precise language can be important.

Yes people, I made an error. I saw that justjoe was correcting me, but left it as someone who likes to correct.

Thanks for everyone’s help in this matter.

I will make sure that I am grammatically correct going forward, even though this had nothing to do with the question.

Gerry

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I really appreciate how the Pro Tax Community helps me out. Unfortunately this particular thread has gone off the tracks and is not doing any good. Perhaps antagonists would do better by emailing to each other directly and keep this site serious.

@benoit.associes1

Actually I advised the OP of the correct procedure needed to solve his problem.
However, I was not thanked, nor even acknowledged.
In fact, I even got insulted further down.

If people want to be helped, they should try to understand the answers given to them, and everyone should try to refrain from irrelevant personal attacks.
Thank you

@gerry, my apologies - we understood what your question was asking. It was plain enough. I was just intending to show that @joe.justjoe1 actually found an error. Many of us make grammatical mistakes on the forum. I was not intending to be critical of your posts.

With respect, I don’t think so.

The question asked did not appear to be the apparent real tax issue, since the basic premise (“a couple”) appears to have been a faulty one in terms of ITA definitions…

Depending on the resolution(s) of that, there could be different branches of tax treatment, and different from each other.