The following comment was left on my site. The user and comment mention plugin interpreted the # 1 and # 2 as comment references, which isn't a problem, however it also corrupted the link at the end. Rather than linking it, some of the html code ended up in the comment. See attached file.
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Introvert, your post below is wrong.
Your point #1 stating there is a 50% rule is wrong. Here is a quote from the CRA Income Tax Rulings Directorate:
”There is no specific percentage or threshold which may be used in determining whether the particular change in use of a particular property is ancillary to the use of the property as the taxpayer’s principal residence.”
Your point #2 is also wrong; you say: “you don’t make any structural changes to the property”.
The majority of suites have a kitchen and a separate entrance, both of which are deemed structural changes by CRA.
Here is a quote from the CRA Income Tax Rulings Directorate regarding structural changes:
”...such changes must be of a more permanent nature, such as the installation of a separate entry or kitchen...”
The bottom line for you Introvert is your GH house has appreciated by about $350k over the past few years and if your suite is 40% of your house then you have a capital gains liability of about $140,000. If you sold today you would declare $140,000 capital gains and pay income tax on $75,000, which is added to your income. Your capital gains tax bill would be about $35,000.
