Ms. Andrews purchased a home in Waterloo in 2002 at a cost of $86,000. She lived in the home until January 29, 2005, at which time she moved to Vancouver and rented a home in Vancouver. At the time of the move, Ms. Andrew's Waterloo residence had risen in value to $230,000. Expecting that real estate prices would continue to rise, Ms. Andrews chose to retain ownership of her Waterloo home and rented it to a third party.
In June 2011, Ms. Andrews decided she missed living in Waterloo and chose to return. She returned to Waterloo where she took up residence in her Waterloo home. At the time, the Waterloo residence had a fair market value of $294,000. In March 2012, Ms. Andrews decided she was tired of living in the city. She sold her Waterloo home for $284,000 and moved to the countryside.
Prior to filing her 2012 personal tax return, Ms. Andrews has requested your advice in minimizing the capital gains she must report on the sale of her home.
REQUIRED
Calculate the minimum capital gain for Ms. Andrews on the sale of her home under the following circumstances:
(A) Assuming that Ms. Andrews elects to be deemed not to have changed the use, and
(B) Assuming that the election is not made.