Canadian selling rental house - capital gain and at
My question is: Canadian-specific QUESTION: Dear Sir, We are acquiring income producing properties and are now at the point where we may consider flipping one of the first purchased. The capital gains issue is our primary concern. With a purchase price of 270K and selling of 450K what are the tax implications? More specifically, how is the gain applied against our income? Is it tacked on to the gross income and then taxed according to our tax bracket? Thanks, MXXXXXXXXX --------------------------------------------------------------------------- david ingram replies: I am tied up in a five day divorce trial and have run out of time to answer any of these specifically. If you go to www.centa.com, click on tax guide on the left and then on capital gains you will find a lot of information on Canadian Taxation of Capital Gains. Note that only 50% of capital gains is taxable again. And, if you have only held the property for a short time and are "flipping" it as you suggest, the gain is taxed at straight income tax rates on top of your other income. "Flipped houses are never treated as capital gains." The following questions should help you. QUESTION: I have owned a rental property for 8 years and would like to sell it to a friend. Is there any way that I can structure the sale so that I spread the capital gain out over three years? --------------------------------------------------------------------------- david ingram replies: Canada will allow you to set up a reserve over a period of up to five years. You must carry the mortgage to do this. If you carry a mortgage, the US will allow you to spread the profit over the life of the mortgage. If you are paid out early, the capital gain is taxable when you get it in both countries. ================ My question is: Canadian-specific QUESTION: If I bought and moved into a house and decide 6 months later that I don't like it and sell that house to move elsewhere do I attract capital gains on the sale of my home? ================================= david ingram replies: And how high is up? If you bought a house to resell any profit is taxable at ordinary income rates unless you can get it into another category. If you bought a house or cabin to rent or use as a second home and decide ten years later to sell it for some reason or other, it is likely a capital gain. If you buy a house and decide to sell it in six months, you can expect that the CRA "might" try and tax you at full rates unless you can show that the house was truly your principal residence and that you sold it for reasons other than making a profit. reasons might be: 1. You lost your job 2. The school your child goes to is just not any good 3. You cannot stand your neighbour 4. You get divorced 5. you are transferred to another city 6. You are pregnant and need a bigger house 7. My favourite was a couple who ended up in a battle with organized druggies and sold out in fear of their lives. However, if you bought a fixer upper and fix it up and sell it and buy another fixer upper around the corner and your kids keep on going to the same school and you shop at the same stores and catch the same bus, etc., you will be paying straight tax. Answers to this and other similar questions can be obtained free on Air every Sunday morning. Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Cartier Partners and I will be hosting an INFOMERCIAL but LIVE talk show called "ITS YOUR MONEY" Those outside of the Lower Mainland will be able to listen on the internet at www.600AM.com Local phone calls to (604) 280-0600 - Long distance calls to 1-866-778-0600. Old shows are archived at the site. This from ask an income tax immigration planning and bankruptcy expert consultant guru or preparer from www.centa.com or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with expatriate: multi jurisdictional cross and trans border expatriate gambling refunds for the United States, Canada Mexico Great Britain the United Kingdom, Kuwait, Dubai, Saudi Arabia, South Africa, Thailand, Indonesia, Egypt, Antarctica, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, American and Canadian and Mexican and any of the 43 states with state tax returns, etc. income tax wizard wizzard guru advisor advisors experts specialist specialists consultants taxmen taxman tax woman planner planning preparer of Alaska, Alabama, Arkansas, Arizona, California Denver Colorado, Connecticut, Delaware District of Columbia Miami Florida, Garland Georgia, Honolulu Hawaii, Idaho, Illinois, Indiana Des Moines Iowa Kansas Kentucky, Louisiana Bangor Maine Maryland Boston, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon. Paris, Rome, Sydney, Australia Hilton Pennsylvania, Rhode Island, Rockwall, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin, Wyoming, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec City, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland, Yukon and Northwest and Nunavit Territories, Mount Vernon, Eumenclaw, Coos Bay and Dallas Houston Rockwall Garland Texas Taxman and Tax Guru and wizzard wizard - David Ingram's US/Canada Services US/Canada/Mexico Tax Immigration & working Visa Specialists US / Canada Real Estate Specialists 4466 Prospect Road (Personal residence by appointment only please) North Vancouver, BC, CANADA, V7N 3L7 Calls accepted from 10 AM to 10 PM 7 days a week Res (604) 980-3578 Cell (604) 657-8451 Bus (604) 980-0321 Fax (604) 980- 0325 davidingram at shaw.ca www.david-ingram.com Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com -- No virus found in this outgoing message. Checked by AVG Anti-Virus. Version: 7.0.300 / Virus Database: 265.7.2 - Release Date: 1/21/05 -- No virus found in this outgoing message. Checked by AVG Anti-Virus. Version: 7.0.300 / Virus Database: 265.7.2 - Release Date: 1/21/05
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