Capital Gains - how much do you pay????

[Woody]

Regarding capital gains.

How does it work if its not your primary residence?  Do you pay 30% on the sale price, or on the difference between purchase price and sale price.

ie.  If I buy for 5000, and sell for 10000,   do I pay  0.3 X 10000 = 3000   or do I pay 0.3 X 5000 = 1500 ?

[jreist]

Taxed on 50% of the profit

[JulyB]

I would say 50% of your gain after all related expenses is taxable for individuals.  That is, the profit (50% of the gain) will be added to your personal income for that year.

For corporations, the gain is 100% taxable.  It is hard to say which is better (corporation or individual) since most of the cases we have to pay 25% of the TOTAL gain as tax in either case. 

For individuals, 50% of gain is taxable and if your tax bracket is in the 50% range, then it will be more or less 25% of TOTAL (50% x 50%).

For corporations, if yours is a small Canadian owned one, the tax rate is also, more or less, 25% of the gain.

For me, I like to buy lands under corporations since the liability will be limited, especially when there is an environmental concern (although in Canada we are using the 'Polluter Pays Principle').  It is easy to file the tax return yourself by using softwares such as Quick Tax.

Anyhow, it is a pleasure to pay tax -- that means you have earned some money. 

[JulyB]

Sorry, one more thing.

If you use CCA (capital cost allowance) to reduce your annual rental income (if it is a rental property), then your gain will be higher than difference of your sale price and purchase price.  The gain will be the difference of your sale price and the depreciated price on book, of course, minus all the related expenses such as agent's commission. legal fees and etc.

[Rob]

Anyhow, it is a pleasure to pay tax -- that means you have earned some money. 

The pleasure is yours not mine. 


Harper during the last election was going to change the way capital gains are taxed.  He stated no capital gains will not be paid if the money is reinvested within 6 months.  So, if he gets around to changing that policy just keep investing the profit.

[RichD]

My accountant told me that capital gains is 1/2 your current tax rate?? Maybe he was just giving me the simple description?

[Rob]

It should be 50% of your profit (gross investment income - (fees, other losses and other deductions))

[bizurko]

RichD,

As I understand it, you pay capital gains on 1/2 OF YOUR PROFIT, AT the rate at which you are normally taxed.  I suspect that's what your accountant told you.

[Orion_95]

Being taxed %50 of your current rate on %100 of the profit, and being taxed %100 of your current rate, on %50 of the profit, is the same # folks

Sorry to dig this one up from the grave, but I think the capital gains thing is a valuble issue.

[Frank]

Best double check your math.  You don't need a computer for this one.  50% of 50% is half of 50% of 100%.  You are much better off if you can categorize the deal as a capital gain rather than in the nature of trade.

[Orion_95]

I agree, but their argument was being taxed %50 of your current rate, on %100 of the gain, or %100 of your current rate, on %50 of the gain, which is the same either way.

[thecobo]

hi room :
is there any one who knows about investment in panama
thanks

[Frank]

Sorry, but the initial logic is somewhat flawed in that it does not consider the eventual bottom line - that is, coin in your pocket.  Yes, you can pay at a lower rate within a corporate entity - initially, but eventually the piper must be paid and that happens when you pay out the dividend to you the shareholder.   The argument was that by doing it within a corporation and considering it as business income, you could write off your costs of searches, etc.  - that was the one good point of doing it that way, but I still think you can get a better bang if you can call it capital gain.

Old English accountants song goes:            oh, a bean and a bean and a half of a bean - make a bean and a bean and half.

still the same thing.