[quote=I-Hate-Hulse;968834]Bingo.
"A complete or partial change in the use of a property from a principal residence to income-producing, or vice-versa, results in a deemed disposition of the property by the taxpayer at fair market value."
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The point of the excercise is to shelter the value of condo A's capital gain. This would bite him in the a$$ if the market were to jump and condo B was worth twice as much in the year between ACB and deemed disposition. They he'd owe money on a condo in which he didn't even sell. Should the market go sideways the deemed disposition would be pretty much at ACB anyway while still protecting the gains on condo A. Also condo B would have to be rented out to be considered 'income producing,' if it was left alone I don't think it would be considered a 'deemed disposition'.
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