My question is: Canadian-specific
QUESTION: If you sell investment property, is there difference tax-wise if
you sell it in 6 months versus 14 months? Do you have to hold a property
for a year before you sell it so you get taxed at 50% capital gains? Thank
you again.
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DAVID INGRAM REPLIES:
This is an age old question but actually pretty clear. The clue is to be
found in your "intention" when you bought the property. If you bought a
rental house with the absolute intention of keeping it for the rest of your
life and then the best investment you had ever seen came up or you suddenly
needed money to fund an operation and the only source was the rental house
you had just bought, the profit (if any) would be a capital gain even if you
owned it a week or a month.
In most cases, unless you bought a lot to build you r own house on and then
sold it when you found a prebuilt house on a better lot, the sale of vacant
land will always be straight income because the only way you can make money
is to sell it at a profit if it is not farmed, etc.
However, if you buy a rental house or any other investment (with the
exception of shares which can be exempted specifically under section 36 of
the ITA) with the idea of selling it to make a profit (as opposed of earning
rental income for a long time, the sale is automatically NOT a capital gain
whether you keep it for a week, a month, a year or two years.
goto www.centa.com, click on "Tax Guide" in the top left hand corner - click
on capital gains and read the 27 pages two or three times to get a better
feel for the subject. You will also find an explanation of Section 36 there.
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, I, david ingram am a
permanent guest on Fred Snyder of Dundee Wealth Managers' 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 <http://www.600am.com/>
Call (604) 280-0600 to have your question answered. BC listeners can also
call 1-866-778-0600.
Callers to the show and questioners on this board can also attend the
Thursday Night seminars on finance and making your Canadian Mortgage
Interest deductible.
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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Disclaimer: This question has been answered without detailed information or
consultation and is to be regarded only as general comment. Nothing in
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and all non-contractual duties are expressly denied. All readers should
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