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Do I have to Pay Capital Gains when selling property?
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If this property is your primary residence. No, You will not pay capital gains when selling property on any appreciation or inflation of value that has occurred since you purchase it.
But what if it was your primary residence, and at a later date your decided to start renting it? Yes, you will pay capital gains when selling property on the time frame in which the property was deemed a rental investment.
Take for example you bought the house in 2010, and you wish to sell in 2018. However in 2016 you decided to rent the property out instead of live in it. You will pay capital gains on the properties appreciation that occurred between 2016 and 2018. But you are capital gains exempt from 2010 to 2016.
How about this scenario: You live in the property but you rent out the basement suite?
When you go to sell the property you will pay capital gains on the portion you rented out. Let’s say the rental property takes up 25% of the properties square footage. You will have to pay capital gains on 25% of the appreciated value since the time you started to rent out that portion.
There may be even further unique circumstances and your property and living situation may not be so cut and dry. A good mortgage broker can point you in the right direction! But it’s is extremely important to speak to an accountant or bookkeeper about your scenario before you make a certain decision to make sure it’s the right one.
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