Taxes on condo purchase due to fire
We purchased a condo while waiting for our existing condo to be totally rebuilt from the foundation up due a fire. We are moving back in to the condo when it is completed. I renovated the small condo we purchased while waiting for the rebuild that has taken over three years. We will own the small condo for 16-17 months and have lived in it the entire 16-17 months before we sell it. Are there any provisions for a reduced capital gains tax in this instance were our primary residence was not habitable and the only reason we purchased the small condo to live in while waiting for this long process to be completed.
I’m so sorry to hear about your fire. I know that can be a difficult thing to go through. I’m glad to hear you will be able to move back into your unit. Great question. There is a category called unforeseen circumstances where if an unexpected event such as a disaster, act of war, terrorism etc occurs there may be a reduction or elimination of your capital gains tax. Generally, you have to live in the home for 24 or more months to avoid capital gains tax, but because of the unforeseen fire, and because it wasn’t your intention to flip the property, you may meet the exception. Since we can’t give specific tax advice, I suggest consulting with your tax professional and explaining the situation before you sell the condo. Another alternative would be keeping the condo as a rental property if it makes sense based on your carrying costs and what you could get for rent.
I wish you the best of luck.