I remembered - sort of at the eleventh hour, as the tenant moves in this week - that I was advised to get an appraisal on the condo at the time that it changes from my primary residence to a rental property. This change in use from primary residence to income property is a "Deemed Disposition", and it's important to know the fair market value of the condo at this time.
Basically, whenever we do decide to sell the condo, we will be taxed on the capital gain from the time that it was not our own residence.
So as far as I understand, this is the way the tax will be calculated:
Tax Rate (assume 50%) x 50% of Capital Gain.
So, if the capital gain was $100,000, we'd be taxed on 50% of that, and assuming a 50% tax rate, we'd be taxed $25,000 on the $100,000-gain.
However, there is also an exemption for the time that the residence was a primary residence. That exemption is calculated as:
# of years as primary residence / # of years owned x Capital Gain.
So let's say we sell it in 10 years. I would have lived in it for 5 of the 15 years I owned it, and so the exemption would be: 5 / 15 x 100,000 = $33,333.33
So the exemption is $33,333.33, meaning the taxable capital gain is:
$100,000 - $33,333.33 = $66,666.67
So in this case, with the exemption, the tax on the capital gains, assuming again a tax rate of 50%:
$66.666.67 x 50% x 50% = $16.666.67 paid in taxes
In any case, I have to have the appraisal done. Our realtor is working on one for us as we speak. But does anyone know if I need a licensed appraiser to also step in? What holds up in the CRA's eyes?