Capital gains questions

[MoneyGuy]

Sixpacked is correct, you'll get dinged. If I can offer one more piece of advice, don't try to hide this money. That can get you into a whole heap of trouble.

Declare and pay. Maybe buy some RRSPs to offset the taxes.

[MoneyGuy]

Originally Posted by fotze

How do stock options and grants work for capital gains.

If you get 500 options at $50 and decide to sell at $100. How does it get taxed? Is it $25,000 at your applicable tax rate? or is it a capital gain?

What about stock grants where you are given stock at a certain price?

I'm thinking back to my CFP studies. I know this was in there, but this is not something an advisor deals with very often so I don't remember. This is a complex cap gains issue anyway. This is one I'd definitely talk to an accountant about. Or, if you ask really nicely, I think I could get an answer for you in a few days. I`d call in a favour. If no one here answers (maybe there are accountants on the site) then let me know if you`d like me to check for you.

[Bobblehead]

Originally Posted by Robbob

<stuff>

You'll need to figure out what the value of your place was when you moved out. You are allowed to claim it as your principle residence up to that point. Then it underwent a change of use.
You will need to declare the gain from that point to when you sold it.

[Bobblehead]

Originally Posted by SaprykinPWNSjoo

sorry to revive the thread..But is it true you don't have to live in your residence for 6 months in order to sell it and avoid capital games. I cant navigate cra website at all

I'm not sure if there is a hard limit, but you must inhabit that residence, so if you don't change all your contact information/banking records/etc then CRA may disallow the claim.

The rules say you can only claim one residence as your principle residence in a year, although they do recognize 2 in the year that you move from one to another.

It pretty much comes down to, if you actually move into a place, you'll probably be fine. If you try and play a game to trigger the PRE, expect to be questioned and have it disallowed. Anyplace where property values have gone as crazy as Calgary's you can be sure a boatload of people have tried to stretch the rules adn CRA will know the telltale signs of avoidance.

[I-Hate-Hulse]

Originally Posted by fotze

How do stock options and grants work for capital gains.

If you get 500 options at $50 and decide to sell at $100. How does it get taxed? Is it $25,000 at your applicable tax rate? or is it a capital gain?

What about stock grants where you are given stock at a certain price?

It would be $25,000 in benefit put towards your employment income. However, you are also entitled to 50% of that same benefit to be a deduction in arriving at taxable income (as long as the exercise price is > than the grant price), so I'm guessing that is what you want to hear.

I would guess that stock grants at a certain price are no different than you purchasing stock at that price. You're still subject to paying capital gains on the difference between what you were given it at vs what you sell it at. Your employer should have T4'ed you on the amount you were "given" in stock and that should have been put into income the year you received it.

This guide from E&Y on Personal Taxes cover this and many other tax topics, such as the "Should I incorporate or not?" decision. I highly recommend that anyone with tax questions take a look in here 1st to see if it's covered as it's a more reputable source than us hockey nerds pontificating.

http://www.ey.com/Global/assets.nsf/Canada/MYPT2008/$file/MYPT2008.pdf