Capital Gains Tax

[Neeper]

How much are we taxed when it comes to capital gains? I sold my second house and I am wondering how badly I am gonna get dinged.

[Incinerator]

50% of your capital gains is taxable at your income's rate, consult your accountant for details.

[Sylvanfan]

I had heard with properties that they were asking people to report it as actual income which means the entire amount would be taxable.

[cSpooge]

Originally Posted by Sylvanfan

I had heard with properties that they were asking people to report it as actual income which means the entire amount would be taxable.

you have to report the full amount but you are only taxed on 50% of it.

[Mccree]

Originally Posted by Sylvanfan

I had heard with properties that they were asking people to report it as actual income which means the entire amount would be taxable.

That is more if you are in the business of flipping homes. (several a year) then they consider you to be in the "business" of selling houses.

[Tron_fdc]

My bro is an accountant, and he said that you would take your purchase price, add in any costs over the year (interest, maintenance, etc), subtract it from your sale price, which will give you the yearly income. Take the yearly income, divide it by 2, and tht's what you pay tax on (no ida what rate it's at though).

At least that's how I understood it....

[jamesteterenko]

If you want to know your marginal tax rate (the rate you'd pay on the next dollar you earn), see here: http://www.taxtips.ca/marginaltaxrates.htm. The highest in Alberta is 39% (which would be 19.5% for Capital Gains) for income over $120,887.

James.

[Locke]

Originally Posted by Tron_fdc

My bro is an accountant, and he said that you would take your purchase price, add in any costs over the year (interest, maintenance, etc), subtract it from your sale price, which will give you the yearly income. Take the yearly income, divide it by 2, and tht's what you pay tax on (no ida what rate it's at though).

At least that's how I understood it....

Thats pretty much it. (Original Purchase Price + Expenses) - (Selling Price) = Capital Gains

Captial Gains/2 = Taxable Capital Gains

Taxable Capital Gains x Your Marginal Tax Rate = Impending Anal Rape

[Neeper]

Man, I am screwed then 50% is huge, I had no idea it was that much, dear lord.

[Tron_fdc]

Originally Posted by Neeper

Man, I am screwed then 50% is huge, I had no idea it was that much, dear lord.

It's actually a max of 39% on 50% of the taxable capital gains, if that helps ease the pain....

[Bertuzzied]

Originally Posted by Neeper

Man, I am screwed then 50% is huge, I had no idea it was that much, dear lord.

Sell it to a friend or relative at a lower sticker price.

I'm pretty much in the same boat. If you want to get out some equity without selling get a secure line of credit. Helps avoids capital gains for now and hopefully down the road the government will lower the rates.

[albertGQ]

Originally Posted by Neeper

Man, I am screwed then 50% is huge, I had no idea it was that much, dear lord.

its only 50% of your marginal tax rate. Its much better than working OT or getting a dividend.

It used to be 75%, than 66%, and now its 50%

[Mccree]

Originally Posted by Neeper

Man, I am screwed then 50% is huge, I had no idea it was that much, dear lord.

But you made the money why are you screwed. Good on you for making a profit and paying some tax. It is better then losing and paying nothing.

I used to feel bad for people that pay alot of tax but then relaized how much they are making to pay that much tax. I once prepared a tax return that had taxes owing ( after taxes withheld and quaterly installments) of over 5,000,000. I would love to pay that much tax once.

[Locke]

Originally Posted by Kobatuzzied

Sell it to a friend or relative at a lower sticker price.

I would strongly advise against that. Non-Arms Length transactions have some healthy penalties if they dont satisfy some fairly stringent criteria.

[corporatejay]

Originally Posted by Locke

I would strongly advise against that. Non-Arms Length transactions have some healthy penalties if they dont satisfy some fairly stringent criteria.

###.

the penalty is basically both of you get taxed.

The person you sell it to gets their adjusted cost base (the amount they paid for it) increased to the actual amount.

AND

you get your selling price readjusted to the proper amount. Don't Fata with Revenue Canada unless you have deep pockets, they can bury you.

[Tron_fdc]

Yeah, we get an audit done by PWC every year at our company, and afterwards go over it with a few of the partners. They have told us on many occasions that you have to pay tax at some point, no matter what. The sooner you get used to it, the easier it will be to accept.

It sucks...but it's better than living in a 3rd world country.

[Clarkey]

There is no capital gains tax on your primary residence.

Couldn't you put the title of one property in your name and the other in your partners? Your partner would technically have to live in it for 6 months or whatever the time period is.

[Locke]

Originally Posted by Clarkey

There is no capital gains tax on your primary residence.

Couldn't you put the title of one property in your name and the other in your partners? Your partner would technically have to live in it for 6 months or whatever the time period is.

If your partner is legally considered your "partner" regardless of sex, then your primary residence is your partner's primary residence.

[Sylvanfan]

Originally Posted by corporatejay

Don't Fata with Revenue Canada unless you have deep pockets, they can bury you.

Not only that...they have a lot of petty vindictive people working for them who love nothing more than to spend 20 grand of tax payers money to find someone who's taxes were short by like $500. That nerd kid in school who knew every technicality and annoyed you to no end.....Yeah he works for Revenue Canada now doing audits and he remembers being stuffed in a locker.

[STAMPEDRED]

Originally Posted by Sylvanfan

Not only that...they have a lot of petty vindictive people working for them who love nothing more than to spend 20 grand of tax payers money to find someone who's taxes were short by like $500. That nerd kid in school who knew every technicality and annoyed you to no end.....Yeah he works for Revenue Canada now doing audits and he remembers being stuffed in a locker.

You sound a little bitter there Sylvanfan... was that you??

(if so, you're not gonna audit me are ya?? )

I think Lockes math is wrong.

Isn't it:

Selling price - reno costs - carrying costs (bank and realtors fees) - purchase price = better than what you get taxed for actually working 9-5 for any stiff out there??