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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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  #1  
Old 11-26-2020, 10:42 AM
climber9 climber9 is offline
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Default Flip primary residence for profit - income counts for the child support calculation?

Hi All,

I think the question in the subject is straightforward. Any experience or case law on this?

I know it does not currently count as income for tax purposes (although now supposed to report it on the tax return I think?).

But can it count for the child support calculation.

Thanks
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Old 11-26-2020, 11:39 AM
rockscan rockscan is offline
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They are selling their house?

Selling a house has nothing to do with child support.

If they are flipping houses as a job and not reporting the income then yes that is relevant to child support if they are either the ncp or its an offset payment situation.


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Old 11-26-2020, 05:43 PM
climber9 climber9 is offline
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Two houses were bought, reno'd, and sold within the span of 3 years. Net profit for both say $200,000. They were both primary residences. This person also had a full time job at the time. Full time job income was reported, but house flip income was not.
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Old 11-26-2020, 05:54 PM
rockscan rockscan is offline
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If she lived in it then no its not income. She just makes smart living decisions.

She has a spouse too so presumably he pays part of the costs and earns some of the sale.


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Old 11-30-2020, 10:56 AM
Mom2414 Mom2414 is offline
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Check out CanLii Ewing v. Ewing

The short answer is that in most cases the non-recurring Capital Gain should not form part of your income for the purposes of calculating child support. The analysis starts by considering what the total income is and then adjusting the income to exclude the Capital Gain when appropriate to do so.

For example, if you bought and sold properties regularly and had Capital Income every year, then you might find that the Court might consider the Capital Gain a regular part of a fluctuating income. In that case, I would expect the Court to average their income over the course of three years.


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Old 11-30-2020, 11:03 AM
rockscan rockscan is offline
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Quote:
Originally Posted by Mom2414 View Post
Check out CanLii Ewing v. Ewing

The short answer is that in most cases the non-recurring Capital Gain should not form part of your income for the purposes of calculating child support. The analysis starts by considering what the total income is and then adjusting the income to exclude the Capital Gain when appropriate to do so.

For example, if you bought and sold properties regularly and had Capital Income every year, then you might find that the Court might consider the Capital Gain a regular part of a fluctuating income. In that case, I would expect the Court to average their income over the course of three years.


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I dont believe its a capital gain if you live in the home for a certain period. The OP noted that the ex lived in the homes therefore it is not a capital gain. I think there could be an argument if the individual or together with their spouse buys, renovates and sells houses annually however it is a fine line to try with the costs of a lawyer and potential costs if you lose.


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Old 11-30-2020, 11:08 AM
Mom2414 Mom2414 is offline
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Quote:
Originally Posted by rockscan View Post
I dont believe its a capital gain if you live in the home for a certain period. The OP noted that the ex lived in the homes therefore it is not a capital gain. I think there could be an argument if the individual or together with their spouse buys, renovates and sells houses annually however it is a fine line to try with the costs of a lawyer and potential costs if you lose.


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Agreed. The OP should consider strong likelihood of it not being considered capital gain bc its a primary residence. A judge however may see it differently if theres a pattern. Not to mention the inconsistencies and disruptions that moves can have on children. Theres a level of instability that should be considered especially for children of divorce.


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Old 11-30-2020, 11:50 AM
climber9 climber9 is offline
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Thank you all, I appreciate the advice.
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