Date: Friday April 07, 2006
Time: 09:51 PM -0700
QUESTION:
Hi David , I am thinking about buildling a home and selling it in 6 months I
was wondering if you can tell me the pros and cons off doing this ( capital
Gains , GST ETC)my husband and myself are both employees with full time
empolyment - we are hiring someone to managehis fee ($20k to $30k) this
project, my question is what can i claim towards income tax I know i may
have to pay capital gains on any profit i make, put what can i ride off -
should i open a busiess account or can i go without opening one and still
claims expense , any suggestion would be great .. thanks.
========================
david ingram replies:
WHAT YOU ARE DOING IS A VENTURE IN THE NATURE OF TRADE AND ANY PROFITS WILL
BE ADDED TO THE TOP OF ANY OTHER INCOME YOU HAVE AND TAXED AT STRAIGHT
RATES.
This is not a capital gains situation.
As for expenses, keep track of everything.
My suggestion would be to get a big synoptic book and record it all with pen
and ink. Set up 24 columns or so and label them all with the individual
components of the building. You can also use an electronic spread sheet
like excel but even if you do that, keep a paper version as well.
register immediately for a GST number because you will HAVE TO CHARGE GST on
the sale and if you get your number early, you will be able to use all the
GST you pay as an input credit.
You do NOT need a business account but it is likely easier to run with one.
What you can do is consider using this business venture to make the mortgage
on your own home deductible.
When you can use your own home to borrow money for the project. When you
sell the house and get paid out, pay off any non-deductible loans first.
Read the November 2001 Newsletter in the top left hand box at www.centa.com
for more information.
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