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Questions and Answers / Re: Buy Properties in other province
« on: July 22, 2009, 01:24:32 AM »
What tax does the investor pay upon the sale of an investment real estate property in Canada?
In certain circumstances, the capital gain when selling the property can be exempted using the principal residence exemption. If you sell the real estate property for more than it cost (and it does not qualify for the principal residence exemption), this will be taxed as a capital gain.
Upon the sale of an investment real estate property, any net increase in the value of a property is taxed in the form of capital gains which is the preferred form of income from a tax perspective. In Canada, capital gains have preferential tax treatment as compared to interest and dividends because only 1/2 of the capital gain is included in taxable income. An Ontario investor in the top marginal tax bracket would pay 23.21% tax on capital gains, versus 46.41% on employment, business, or interest income, or 31.34% on dividend income.
For additional information regarding the taxation of rental income please refer to the Canada Revenue Agency Guide for Rental Income.
In certain circumstances, the capital gain when selling the property can be exempted using the principal residence exemption. If you sell the real estate property for more than it cost (and it does not qualify for the principal residence exemption), this will be taxed as a capital gain.
Upon the sale of an investment real estate property, any net increase in the value of a property is taxed in the form of capital gains which is the preferred form of income from a tax perspective. In Canada, capital gains have preferential tax treatment as compared to interest and dividends because only 1/2 of the capital gain is included in taxable income. An Ontario investor in the top marginal tax bracket would pay 23.21% tax on capital gains, versus 46.41% on employment, business, or interest income, or 31.34% on dividend income.
For additional information regarding the taxation of rental income please refer to the Canada Revenue Agency Guide for Rental Income.