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30 Nov

WHAT ELSE DID THE FINANCE DEPARTMENT CHANGE ON OCTOBER 17TH?

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Posted by: Gregory Ero

What Else Did the Finance Department Change on October 17th?

As the dust is settling on the major changes to the mortgage qualifying rate, and it is back to work as usual, some Canadians are starting to realize that there were some other significant changes that affect us all.

Starting this year you must now declare which property is your principal residence. There will be a form in your tax return that must be filled out. The purpose of this of course to make sure that the house flippers of the world pay their fair share of income tax on monies earned by buying and selling homes. This will also affect foreign owners when they sell property in Canada. Even though a family member may have lived in it, they will now pay capital gains tax. They are closing some loopholes in the system where it’s perceived many may have taken unfair advantage.

Another point that was probably missed by most is that if you have a home with a legal suite, when you sell the home you will have to pay capital gains on the portion that is rental. Many of these suites collect rent that is never reported to CRA and people avoid taxes by just pocketing the money. The govt thinks it is only fair that  if you used the rental income to qualify for your mortgage, then the revenue generating portion of the house should be taxed as such. 

For parents that co-sign on their children’s mortgages – most lenders usually want them on both the mortgage and on house title. Will it mean that when the home is sold, there will legal and tax ramifications? Unanswered questions remain on this subject so it’s best to consult your accountant and your Dominion Lending Centres mortgage professional about before proceeding.

Source: Len Lane, Edmonton