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 Post subject: Sell before closing
PostPosted: Sun Jan 25, 2015 9:41 pm 
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Joined: Tue Sep 02, 2014 7:49 pm
Posts: 16
A house that I booked last year will be ready by April of this year.

Am I allowed to dispose the "house" before closing? If I can, who will pay for the closing costs? Me or the new owners?

I currently own a property, jointly with my parents. Will I pay any capital gain tax on the sale of the new house?

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 Post subject: Re: Sell before closing
PostPosted: Mon Jan 26, 2015 12:37 am 
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Joined: Mon Oct 18, 2010 8:22 am
Posts: 3430
Many new home builders will not allow this (it's called assignment) but check your contract to be sure

Selling a house without living in it can have all kinds of tax implications (everything from hst to capital gains) you really need to ask a professional


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PostPosted: Mon Jan 26, 2015 8:27 am 
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Last edited by thumpz2000 on Fri Jul 03, 2015 7:19 am, edited 2 times in total.

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 Post subject: Re: Sell before closing
PostPosted: Mon Jan 26, 2015 9:50 am 
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Joined: Thu Nov 15, 2007 3:55 pm
Posts: 5278
Location: 4th line / St Laurent
As mentioned above, if you are able, there will be an assignment clause in your contract, in which case you will end up paying capital gains tax or investment income tax on the money you've made (depending on your other income operations). If you're not sure what that means, ask your builder, or stop into my office for 5 minutes and I can take a look for you.

BUT as was said, the likely scenario is that you CANNOT assign it, in which case you will have to close on it, and now pay all the closing costs and land transfer taxes as well. Also as mentioned, there may be HST implications. THEN consider an immediate sale might result in paying capital gains taxes.

IF you move in as your primary residence for a while, THEN sell it (time is a grey area, so if anybody tells you 1 months or 3 months or 1 year don't believe them - it has to do with patterns, red flags, and mainly you naming your principal residence for that tax year), then at least you avoid the HST implications and capital gains tax - if it truly is your principal residence. Don't mess with the CRA :)
Good luck with it!

The one common answer - I agree, talk to a professional - and I'm talking about a TAX professional... Don't talk to somebody that just tells you what you want to hear :) Make sure you get the exact details you need, so you understand the implications of whatever decision you make.

Good luck, let us know how it goes!

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 Post subject: Re: Sell before closing
PostPosted: Mon Jan 26, 2015 7:48 pm 
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Joined: Tue Sep 02, 2014 7:49 pm
Posts: 16
Invaluable responses. Thank you very much for taking the time to respond. I have some follow up questions.

Here is the scenario:

Property A - I currently reside in with my parents. I have joint ownership with my parents.
Property B - New house in Milton

If I transfer the title on Property A to one of my siblings before the acquisition date of Property B, live in Property B for let's say 3 months, then sell Property B and move back to Property A. For the 3 months I live in Property B, I change my address on all the government issued ids' etc. Do I incur any capital gain tax or are there any HST implications?

I think not, but just want to confirm.

Mortgage is another issue that I believe I would have to look at. Can't break the term before renewal date without paying hefty penalties, I guess?

Agree that professional help would indeed be quite valuable.


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 Post subject: Re: Sell before closing
PostPosted: Mon Jan 26, 2015 7:57 pm 
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Joined: Thu Nov 15, 2007 3:55 pm
Posts: 5278
Location: 4th line / St Laurent
Call me and I will gladly explain. Fred@fredhelps.com and I will send you my phone number :)
You are somewhat on the right track but there are still risks to every scenario.

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Fred De Carolis
FREDHELPS.COM or on Facebook
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search for Milton's Favourite Realtor!

REVEL REALTY -- MILTON'S FAVOURITE REAL ESTATE BROKERAGE, as voted by YOU!!!


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