The CRA has new rules regarding principal residence exemption. Tarsem Basraon, High Net Worth Planner, TD Wealth, explains what the new rules are and what people need to do to make use of the principal residence exemption.
Print Transcript
Well, the principal residence exemption has
been changed by the CRA back in October.
00:00:17.100 --> 00:00:19.680 align:middle line:84%
But we've just been getting
some more details on it lately.
00:00:19.680 --> 00:00:22.510 align:middle line:84%
And really, this matters
to anybody who owns a home.
00:00:22.510 --> 00:00:25.140 align:middle line:84%
And it also has some far-reaching
consequences for some others.
00:00:25.140 --> 00:00:28.380 align:middle line:84%
Here to explain what happened and
what you need to pay attention to--
00:00:28.380 --> 00:00:29.880 align:middle line:90%
I'm joined by Tarsem Basraon.
00:00:29.880 --> 00:00:31.892 align:middle line:84%
He is a high-net-worth
planner with TD Wealth.
00:00:31.892 --> 00:00:33.100 align:middle line:90%
It is great to have you here.
00:00:33.100 --> 00:00:34.735 align:middle line:90%
Thank you for having me.
00:00:34.735 --> 00:00:37.110 align:middle line:84%
What I wanted to do, if it's
OK, I just want to list out,
00:00:37.110 --> 00:00:39.300 align:middle line:84%
if we could, to start,
just what the changes are.
00:00:39.300 --> 00:00:43.290 align:middle line:84%
And then we'll get into detail on
what each one of those changes is.
00:00:43.290 --> 00:00:45.310 align:middle line:90%
So tell us, what happened first off?
00:00:45.310 --> 00:00:45.810 align:middle line:90%
Sure.
00:00:45.810 --> 00:00:50.160 align:middle line:84%
So there's a whole bunch of changes
that were announced in October 2016.
00:00:50.160 --> 00:00:53.430 align:middle line:84%
One is that there's a change for
nonresidents that are relying
00:00:53.430 --> 00:00:56.270 align:middle line:90%
on a certain rule called the one-plus rule.
00:00:56.270 --> 00:01:01.574 align:middle line:84%
There's a change for certain trusts that
hold principal residence for beneficiaries,
00:01:01.574 --> 00:01:03.240 align:middle line:90%
and then there's some reporting changes.
00:01:03.240 --> 00:01:07.680 align:middle line:84%
So prior to these changes, there
was an administrative position
00:01:07.680 --> 00:01:13.230 align:middle line:84%
that basically allowed you to forgo the
need to actually report the capital gain
00:01:13.230 --> 00:01:16.350 align:middle line:84%
and claiming the principal residence
exemption when you sell your house.
00:01:16.350 --> 00:01:19.690 align:middle line:84%
In the new rules, what they're requiring
is that you actually report it.
00:01:19.690 --> 00:01:23.060 align:middle line:84%
And as a result of that report,
there are some consequences
00:01:23.060 --> 00:01:24.310 align:middle line:90%
if you don't do the reporting.
00:01:24.310 --> 00:01:27.200 align:middle line:90%
So there are some penalties if you late file.
00:01:27.200 --> 00:01:29.910 align:middle line:84%
And also if you don't report,
it could mean that they
00:01:29.910 --> 00:01:33.130 align:middle line:84%
could reassess you beyond the normal
three-year reassessment period.
00:01:33.130 --> 00:01:33.630 align:middle line:90%
All right.
00:01:33.630 --> 00:01:37.130 align:middle line:84%
Let's start with the last one you did first
and get to a little more detail on that.
00:01:37.130 --> 00:01:42.600 align:middle line:84%
So if I own a home, a principal
residence, and I sell it, I have to file,
00:01:42.600 --> 00:01:43.990 align:middle line:90%
whereas before I didn't have to.
00:01:43.990 --> 00:01:44.690 align:middle line:90%
Correct.
00:01:44.690 --> 00:01:48.960 align:middle line:84%
So in the new world, you
have to file a return.
00:01:48.960 --> 00:01:52.320 align:middle line:84%
And in that return, there's
a Schedule 3, which reports
00:01:52.320 --> 00:01:54.390 align:middle line:90%
your capital gains and your capital losses.
00:01:54.390 --> 00:01:58.120 align:middle line:84%
And within that Schedule 3,
you have to actually report
00:01:58.120 --> 00:02:02.970 align:middle line:84%
the description of the property that you're
selling, the year that you acquired it,
00:02:02.970 --> 00:02:05.460 align:middle line:90%
and what the proceeds were for the sale.
00:02:05.460 --> 00:02:10.770 align:middle line:84%
And if you fail to do that, there is a late
filing penalty if you try to file it later.
00:02:10.770 --> 00:02:18.120 align:middle line:84%
And that penalty is $100 a month for every
month after the deadline and up to $8,000.
00:02:18.120 --> 00:02:19.230 align:middle line:90%
That's significant.
00:02:19.230 --> 00:02:20.490 align:middle line:90%
It's very significant.
00:02:20.490 --> 00:02:23.910 align:middle line:84%
And the other issue is that
they've rushed this out
00:02:23.910 --> 00:02:27.600 align:middle line:84%
and they've applied it for
the 2016 taxation year.
00:02:27.600 --> 00:02:30.610 align:middle line:84%
So that means that if you
sold your house in 2016,
00:02:30.610 --> 00:02:35.280 align:middle line:84%
even before October 2016 when
the changes were announced--
00:02:35.280 --> 00:02:37.530 align:middle line:90%
so if you sold in January 2016--
00:02:37.530 --> 00:02:43.440 align:middle line:84%
when you file your 2016 tax return, you're
required to report the sale of your house
00:02:43.440 --> 00:02:44.750 align:middle line:90%
in your return.
00:02:44.750 --> 00:02:49.450 align:middle line:84%
So when you file your taxes in April
2017, coming up in the next few months,
00:02:49.450 --> 00:02:51.040 align:middle line:90%
you'll need to report that.
00:02:51.040 --> 00:02:54.210 align:middle line:84%
So there is a lot of
uncertainty about the way
00:02:54.210 --> 00:02:58.260 align:middle line:84%
they're going to deal with that, because they
have what they call a communication period.
00:02:58.260 --> 00:03:01.530 align:middle line:84%
So Canada Revenue Agency is saying that
we're aware that this was rushed out
00:03:01.530 --> 00:03:03.510 align:middle line:90%
and we need to give people some leeway.
00:03:03.510 --> 00:03:07.100 align:middle line:84%
So they've said that they
won't charge penalties
00:03:07.100 --> 00:03:13.862 align:middle line:84%
if you forget to do it for your 2016
taxation year, unless it's excessive.
00:03:13.862 --> 00:03:15.570 align:middle line:90%
But we don't really know what that means.
00:03:15.570 --> 00:03:16.856 align:middle line:90%
Err on the side of caution.
00:03:16.856 --> 00:03:17.355 align:middle line:90%
Yeah.
00:03:17.355 --> 00:03:17.854 align:middle line:90%
Exactly.
00:03:17.854 --> 00:03:21.570 align:middle line:84%
So you have to tell your accountant
when you do your return that you
00:03:21.570 --> 00:03:25.170 align:middle line:84%
sold a house, which traditionally,
in the last 20, 30 years,
00:03:25.170 --> 00:03:28.240 align:middle line:84%
you would have never told your
accountant that you're doing that.
00:03:28.240 --> 00:03:28.740 align:middle line:90%
Right.
00:03:28.740 --> 00:03:29.531 align:middle line:90%
So now you have to.
00:03:29.531 --> 00:03:35.220 align:middle line:84%
Now, if you hold two properties-- if you
hold a house, let's say, and a cottage--
00:03:35.220 --> 00:03:39.520 align:middle line:84%
before, you could have just done it and
you didn't need to tell anybody anything.
00:03:39.520 --> 00:03:41.580 align:middle line:90%
And some people may have abused this as well.
00:03:41.580 --> 00:03:43.080 align:middle line:90%
Now you have to declare.
00:03:43.080 --> 00:03:45.520 align:middle line:84%
So there's clarity on which
is which and what counts.
00:03:45.520 --> 00:03:46.020 align:middle line:90%
Correct.
00:03:46.020 --> 00:03:47.470 align:middle line:90%
So the rules have not changed.
00:03:47.470 --> 00:03:50.701 align:middle line:84%
You still can only have one
principal residence per year.
00:03:50.701 --> 00:03:52.950 align:middle line:84%
But the difference is that
you have to then report it.
00:03:52.950 --> 00:03:55.190 align:middle line:90%
So you had abuses.
00:03:55.190 --> 00:03:58.384 align:middle line:84%
So you had situations where people
were selling their house in one year,
00:03:58.384 --> 00:03:59.550 align:middle line:90%
and they wouldn't report it.
00:03:59.550 --> 00:04:02.370 align:middle line:84%
They would sell their cottage in the
next year, and they wouldn't report it.
00:04:02.370 --> 00:04:04.020 align:middle line:90%
Because the theory was that they--
00:04:04.020 --> 00:04:06.640 align:middle line:84%
you know, I'm going to claim
the principal residence on both
00:04:06.640 --> 00:04:09.040 align:middle line:84%
and maybe claim ignorance
or something like that.
00:04:09.040 --> 00:04:11.669 align:middle line:84%
But in these new rules,
you're forced to do that.
00:04:11.669 --> 00:04:13.710 align:middle line:84%
And the other thing that
this is trying to get at
00:04:13.710 --> 00:04:17.279 align:middle line:84%
is people that are buying
properties for speculation.
00:04:17.279 --> 00:04:21.560 align:middle line:84%
So a common strategy is people will buy
a condo pre-construction in their child's
00:04:21.560 --> 00:04:22.470 align:middle line:90%
name.
00:04:22.470 --> 00:04:24.510 align:middle line:90%
And their child will be 18, 19 years old.
00:04:24.510 --> 00:04:28.410 align:middle line:84%
And then when the condo has gone up in
value in a few years, they'll sell that.
00:04:28.410 --> 00:04:33.730 align:middle line:84%
And under the old rules, the child would
not claim the principal residence exemption.
00:04:33.730 --> 00:04:37.230 align:middle line:84%
But in these new rules, the child
will have to fill out that form.
00:04:37.230 --> 00:04:40.220 align:middle line:84%
And what will happen, likely,
is CRA will say, you know,
00:04:40.220 --> 00:04:44.370 align:middle line:84%
you have a 20-year-old
here with a $200,000 gain.
00:04:44.370 --> 00:04:46.617 align:middle line:90%
And so did they really buy it to live there?
00:04:46.617 --> 00:04:48.075 align:middle line:90%
Or did they buy it for speculation?
00:04:48.075 --> 00:04:49.530 align:middle line:90%
Yeah, a lot more scrutiny.
00:04:49.530 --> 00:04:51.155 align:middle line:90%
I've only got about a minute here left.
00:04:51.155 --> 00:04:55.410 align:middle line:84%
But for the trust side of things, some people
were also claiming a principal resident
00:04:55.410 --> 00:04:56.620 align:middle line:90%
exemption within a trust.
00:04:56.620 --> 00:04:57.120 align:middle line:90%
Correct.
00:04:57.120 --> 00:04:57.390 align:middle line:90%
So you--
00:04:57.390 --> 00:04:58.200 align:middle line:90%
They can't do that anymore.
00:04:58.200 --> 00:04:58.700 align:middle line:90%
Yeah.
00:04:58.700 --> 00:05:01.130 align:middle line:84%
So they've limited that to
only certain types of trusts.
00:05:01.130 --> 00:05:04.860 align:middle line:84%
So there's spousal trusts, certain
qualified disability trusts,
00:05:04.860 --> 00:05:07.500 align:middle line:84%
trusts for minors where
their parents are deceased.
00:05:07.500 --> 00:05:11.890 align:middle line:84%
But generally, there was a strategy
where you put the property in a trust
00:05:11.890 --> 00:05:15.310 align:middle line:84%
for a child that had creditor
issues or family law issues.
00:05:15.310 --> 00:05:19.720 align:middle line:84%
You no longer have the principal residence
exemption available in that situation.
00:05:19.720 --> 00:05:21.172 align:middle line:90%
And in 30 seconds--
00:05:21.172 --> 00:05:24.130 align:middle line:84%
fantastic information we're packing
all in here-- but for nonresidents,
00:05:24.130 --> 00:05:25.600 align:middle line:90%
what was the change there, too?
00:05:25.600 --> 00:05:28.510 align:middle line:84%
So the change there is that it
doesn't affect anybody in Canada.
00:05:28.510 --> 00:05:31.000 align:middle line:84%
But if you're a nonresident,
you used to be able to get
00:05:31.000 --> 00:05:33.664 align:middle line:90%
that plus-one rule that I spoke about.
00:05:33.664 --> 00:05:36.580 align:middle line:84%
That really applies when you sell
and buy a property in the same year.
00:05:36.580 --> 00:05:41.950 align:middle line:84%
And it just ensures that nonresidents will be
subject to tax on their entire capital gain
00:05:41.950 --> 00:05:42.970 align:middle line:90%
on the sale of a house.
00:05:42.970 --> 00:05:45.370 align:middle line:84%
I think everybody's ears perked
up while you were talking, Tarsem.
00:05:45.370 --> 00:05:46.202 align:middle line:90%
Great information.
00:05:46.202 --> 00:05:47.410 align:middle line:90%
Thanks so much for coming in.
00:05:47.410 --> 00:05:48.130 align:middle line:90%
Thank you for having me.
00:05:48.130 --> 00:05:51.338 align:middle line:84%
Tarsem Basraon is a high-net-worth
planner at TD Wealth joining me in-studio.
been changed by the CRA back in October.
00:00:17.100 --> 00:00:19.680 align:middle line:84%
But we've just been getting
some more details on it lately.
00:00:19.680 --> 00:00:22.510 align:middle line:84%
And really, this matters
to anybody who owns a home.
00:00:22.510 --> 00:00:25.140 align:middle line:84%
And it also has some far-reaching
consequences for some others.
00:00:25.140 --> 00:00:28.380 align:middle line:84%
Here to explain what happened and
what you need to pay attention to--
00:00:28.380 --> 00:00:29.880 align:middle line:90%
I'm joined by Tarsem Basraon.
00:00:29.880 --> 00:00:31.892 align:middle line:84%
He is a high-net-worth
planner with TD Wealth.
00:00:31.892 --> 00:00:33.100 align:middle line:90%
It is great to have you here.
00:00:33.100 --> 00:00:34.735 align:middle line:90%
Thank you for having me.
00:00:34.735 --> 00:00:37.110 align:middle line:84%
What I wanted to do, if it's
OK, I just want to list out,
00:00:37.110 --> 00:00:39.300 align:middle line:84%
if we could, to start,
just what the changes are.
00:00:39.300 --> 00:00:43.290 align:middle line:84%
And then we'll get into detail on
what each one of those changes is.
00:00:43.290 --> 00:00:45.310 align:middle line:90%
So tell us, what happened first off?
00:00:45.310 --> 00:00:45.810 align:middle line:90%
Sure.
00:00:45.810 --> 00:00:50.160 align:middle line:84%
So there's a whole bunch of changes
that were announced in October 2016.
00:00:50.160 --> 00:00:53.430 align:middle line:84%
One is that there's a change for
nonresidents that are relying
00:00:53.430 --> 00:00:56.270 align:middle line:90%
on a certain rule called the one-plus rule.
00:00:56.270 --> 00:01:01.574 align:middle line:84%
There's a change for certain trusts that
hold principal residence for beneficiaries,
00:01:01.574 --> 00:01:03.240 align:middle line:90%
and then there's some reporting changes.
00:01:03.240 --> 00:01:07.680 align:middle line:84%
So prior to these changes, there
was an administrative position
00:01:07.680 --> 00:01:13.230 align:middle line:84%
that basically allowed you to forgo the
need to actually report the capital gain
00:01:13.230 --> 00:01:16.350 align:middle line:84%
and claiming the principal residence
exemption when you sell your house.
00:01:16.350 --> 00:01:19.690 align:middle line:84%
In the new rules, what they're requiring
is that you actually report it.
00:01:19.690 --> 00:01:23.060 align:middle line:84%
And as a result of that report,
there are some consequences
00:01:23.060 --> 00:01:24.310 align:middle line:90%
if you don't do the reporting.
00:01:24.310 --> 00:01:27.200 align:middle line:90%
So there are some penalties if you late file.
00:01:27.200 --> 00:01:29.910 align:middle line:84%
And also if you don't report,
it could mean that they
00:01:29.910 --> 00:01:33.130 align:middle line:84%
could reassess you beyond the normal
three-year reassessment period.
00:01:33.130 --> 00:01:33.630 align:middle line:90%
All right.
00:01:33.630 --> 00:01:37.130 align:middle line:84%
Let's start with the last one you did first
and get to a little more detail on that.
00:01:37.130 --> 00:01:42.600 align:middle line:84%
So if I own a home, a principal
residence, and I sell it, I have to file,
00:01:42.600 --> 00:01:43.990 align:middle line:90%
whereas before I didn't have to.
00:01:43.990 --> 00:01:44.690 align:middle line:90%
Correct.
00:01:44.690 --> 00:01:48.960 align:middle line:84%
So in the new world, you
have to file a return.
00:01:48.960 --> 00:01:52.320 align:middle line:84%
And in that return, there's
a Schedule 3, which reports
00:01:52.320 --> 00:01:54.390 align:middle line:90%
your capital gains and your capital losses.
00:01:54.390 --> 00:01:58.120 align:middle line:84%
And within that Schedule 3,
you have to actually report
00:01:58.120 --> 00:02:02.970 align:middle line:84%
the description of the property that you're
selling, the year that you acquired it,
00:02:02.970 --> 00:02:05.460 align:middle line:90%
and what the proceeds were for the sale.
00:02:05.460 --> 00:02:10.770 align:middle line:84%
And if you fail to do that, there is a late
filing penalty if you try to file it later.
00:02:10.770 --> 00:02:18.120 align:middle line:84%
And that penalty is $100 a month for every
month after the deadline and up to $8,000.
00:02:18.120 --> 00:02:19.230 align:middle line:90%
That's significant.
00:02:19.230 --> 00:02:20.490 align:middle line:90%
It's very significant.
00:02:20.490 --> 00:02:23.910 align:middle line:84%
And the other issue is that
they've rushed this out
00:02:23.910 --> 00:02:27.600 align:middle line:84%
and they've applied it for
the 2016 taxation year.
00:02:27.600 --> 00:02:30.610 align:middle line:84%
So that means that if you
sold your house in 2016,
00:02:30.610 --> 00:02:35.280 align:middle line:84%
even before October 2016 when
the changes were announced--
00:02:35.280 --> 00:02:37.530 align:middle line:90%
so if you sold in January 2016--
00:02:37.530 --> 00:02:43.440 align:middle line:84%
when you file your 2016 tax return, you're
required to report the sale of your house
00:02:43.440 --> 00:02:44.750 align:middle line:90%
in your return.
00:02:44.750 --> 00:02:49.450 align:middle line:84%
So when you file your taxes in April
2017, coming up in the next few months,
00:02:49.450 --> 00:02:51.040 align:middle line:90%
you'll need to report that.
00:02:51.040 --> 00:02:54.210 align:middle line:84%
So there is a lot of
uncertainty about the way
00:02:54.210 --> 00:02:58.260 align:middle line:84%
they're going to deal with that, because they
have what they call a communication period.
00:02:58.260 --> 00:03:01.530 align:middle line:84%
So Canada Revenue Agency is saying that
we're aware that this was rushed out
00:03:01.530 --> 00:03:03.510 align:middle line:90%
and we need to give people some leeway.
00:03:03.510 --> 00:03:07.100 align:middle line:84%
So they've said that they
won't charge penalties
00:03:07.100 --> 00:03:13.862 align:middle line:84%
if you forget to do it for your 2016
taxation year, unless it's excessive.
00:03:13.862 --> 00:03:15.570 align:middle line:90%
But we don't really know what that means.
00:03:15.570 --> 00:03:16.856 align:middle line:90%
Err on the side of caution.
00:03:16.856 --> 00:03:17.355 align:middle line:90%
Yeah.
00:03:17.355 --> 00:03:17.854 align:middle line:90%
Exactly.
00:03:17.854 --> 00:03:21.570 align:middle line:84%
So you have to tell your accountant
when you do your return that you
00:03:21.570 --> 00:03:25.170 align:middle line:84%
sold a house, which traditionally,
in the last 20, 30 years,
00:03:25.170 --> 00:03:28.240 align:middle line:84%
you would have never told your
accountant that you're doing that.
00:03:28.240 --> 00:03:28.740 align:middle line:90%
Right.
00:03:28.740 --> 00:03:29.531 align:middle line:90%
So now you have to.
00:03:29.531 --> 00:03:35.220 align:middle line:84%
Now, if you hold two properties-- if you
hold a house, let's say, and a cottage--
00:03:35.220 --> 00:03:39.520 align:middle line:84%
before, you could have just done it and
you didn't need to tell anybody anything.
00:03:39.520 --> 00:03:41.580 align:middle line:90%
And some people may have abused this as well.
00:03:41.580 --> 00:03:43.080 align:middle line:90%
Now you have to declare.
00:03:43.080 --> 00:03:45.520 align:middle line:84%
So there's clarity on which
is which and what counts.
00:03:45.520 --> 00:03:46.020 align:middle line:90%
Correct.
00:03:46.020 --> 00:03:47.470 align:middle line:90%
So the rules have not changed.
00:03:47.470 --> 00:03:50.701 align:middle line:84%
You still can only have one
principal residence per year.
00:03:50.701 --> 00:03:52.950 align:middle line:84%
But the difference is that
you have to then report it.
00:03:52.950 --> 00:03:55.190 align:middle line:90%
So you had abuses.
00:03:55.190 --> 00:03:58.384 align:middle line:84%
So you had situations where people
were selling their house in one year,
00:03:58.384 --> 00:03:59.550 align:middle line:90%
and they wouldn't report it.
00:03:59.550 --> 00:04:02.370 align:middle line:84%
They would sell their cottage in the
next year, and they wouldn't report it.
00:04:02.370 --> 00:04:04.020 align:middle line:90%
Because the theory was that they--
00:04:04.020 --> 00:04:06.640 align:middle line:84%
you know, I'm going to claim
the principal residence on both
00:04:06.640 --> 00:04:09.040 align:middle line:84%
and maybe claim ignorance
or something like that.
00:04:09.040 --> 00:04:11.669 align:middle line:84%
But in these new rules,
you're forced to do that.
00:04:11.669 --> 00:04:13.710 align:middle line:84%
And the other thing that
this is trying to get at
00:04:13.710 --> 00:04:17.279 align:middle line:84%
is people that are buying
properties for speculation.
00:04:17.279 --> 00:04:21.560 align:middle line:84%
So a common strategy is people will buy
a condo pre-construction in their child's
00:04:21.560 --> 00:04:22.470 align:middle line:90%
name.
00:04:22.470 --> 00:04:24.510 align:middle line:90%
And their child will be 18, 19 years old.
00:04:24.510 --> 00:04:28.410 align:middle line:84%
And then when the condo has gone up in
value in a few years, they'll sell that.
00:04:28.410 --> 00:04:33.730 align:middle line:84%
And under the old rules, the child would
not claim the principal residence exemption.
00:04:33.730 --> 00:04:37.230 align:middle line:84%
But in these new rules, the child
will have to fill out that form.
00:04:37.230 --> 00:04:40.220 align:middle line:84%
And what will happen, likely,
is CRA will say, you know,
00:04:40.220 --> 00:04:44.370 align:middle line:84%
you have a 20-year-old
here with a $200,000 gain.
00:04:44.370 --> 00:04:46.617 align:middle line:90%
And so did they really buy it to live there?
00:04:46.617 --> 00:04:48.075 align:middle line:90%
Or did they buy it for speculation?
00:04:48.075 --> 00:04:49.530 align:middle line:90%
Yeah, a lot more scrutiny.
00:04:49.530 --> 00:04:51.155 align:middle line:90%
I've only got about a minute here left.
00:04:51.155 --> 00:04:55.410 align:middle line:84%
But for the trust side of things, some people
were also claiming a principal resident
00:04:55.410 --> 00:04:56.620 align:middle line:90%
exemption within a trust.
00:04:56.620 --> 00:04:57.120 align:middle line:90%
Correct.
00:04:57.120 --> 00:04:57.390 align:middle line:90%
So you--
00:04:57.390 --> 00:04:58.200 align:middle line:90%
They can't do that anymore.
00:04:58.200 --> 00:04:58.700 align:middle line:90%
Yeah.
00:04:58.700 --> 00:05:01.130 align:middle line:84%
So they've limited that to
only certain types of trusts.
00:05:01.130 --> 00:05:04.860 align:middle line:84%
So there's spousal trusts, certain
qualified disability trusts,
00:05:04.860 --> 00:05:07.500 align:middle line:84%
trusts for minors where
their parents are deceased.
00:05:07.500 --> 00:05:11.890 align:middle line:84%
But generally, there was a strategy
where you put the property in a trust
00:05:11.890 --> 00:05:15.310 align:middle line:84%
for a child that had creditor
issues or family law issues.
00:05:15.310 --> 00:05:19.720 align:middle line:84%
You no longer have the principal residence
exemption available in that situation.
00:05:19.720 --> 00:05:21.172 align:middle line:90%
And in 30 seconds--
00:05:21.172 --> 00:05:24.130 align:middle line:84%
fantastic information we're packing
all in here-- but for nonresidents,
00:05:24.130 --> 00:05:25.600 align:middle line:90%
what was the change there, too?
00:05:25.600 --> 00:05:28.510 align:middle line:84%
So the change there is that it
doesn't affect anybody in Canada.
00:05:28.510 --> 00:05:31.000 align:middle line:84%
But if you're a nonresident,
you used to be able to get
00:05:31.000 --> 00:05:33.664 align:middle line:90%
that plus-one rule that I spoke about.
00:05:33.664 --> 00:05:36.580 align:middle line:84%
That really applies when you sell
and buy a property in the same year.
00:05:36.580 --> 00:05:41.950 align:middle line:84%
And it just ensures that nonresidents will be
subject to tax on their entire capital gain
00:05:41.950 --> 00:05:42.970 align:middle line:90%
on the sale of a house.
00:05:42.970 --> 00:05:45.370 align:middle line:84%
I think everybody's ears perked
up while you were talking, Tarsem.
00:05:45.370 --> 00:05:46.202 align:middle line:90%
Great information.
00:05:46.202 --> 00:05:47.410 align:middle line:90%
Thanks so much for coming in.
00:05:47.410 --> 00:05:48.130 align:middle line:90%
Thank you for having me.
00:05:48.130 --> 00:05:51.338 align:middle line:84%
Tarsem Basraon is a high-net-worth
planner at TD Wealth joining me in-studio.
