Capital gains
Posted date : May 30, 2019.
We purchased a condo in Florida four years ago and have made an approximate US$100,000 capital gain on it. But we are thinking of buying another property for about $315,000, thus not receiving any capital gain as we are rolling it all back into another unit. Do we still have to pay tax on the capital gain and, if not, how long must we live in the new unit before we do have to pay any capital gains tax. We are planning on going south for at least another five years, before we sell that one at a profit or loss?
M. MacDonald
Ontario
Response :
Ed.: There is a procedure available in the U.S. to permit you to roll over the gain into the purchased property called a 1031 exchange. This will avoid the immediate payment of capital gains taxes. The rules are complicated ? the funds from the sale have to be held by a third party, there are time limits involved and you will be taxable in Canada (unable to take the offsetting tax which you would have paid in the U.S.). But it can be done.
