A young man owns a property 50/50 with a friend until he meets his girlfriend and wants to settle down.
Facts:
1- young man A, has a townhouse with his friend B since 2016; 50% 50% ownership
2-A married to a girl C this year (2021) and C has a Semi in another city 100% ownership
3- question: if A wants to sell the townhouse next year (2022). What is the townhouse’s taxable portion? They want to clarify the C’s home as matrimonial home.
ANSWER:
Naturally check with a lawyer or accountant and provide all the additional information required, beyond the hypothetical.
I assume that A lived in the townhouse with another friend until he got married. If that is the case, then It should qualify as a principal residence and would be exempt from tax, 2016 to 31 December 2021.
In 2022, the townhouse does not qualify as a principal residence and any gain there, 1 January 2022 until the date of the sale would be subject to tax either as:
1) capital gains tax (50% of the gain being the taxable portion), assuming this is his only other property, or
2) regular business income at full rates on the entire gain 9assuming he has a couple of other income properties.
If money is to be spent and used as a deduction, it should not be expended until 2022.
Brian Madigan LL.B., Broker