CAPITAL GAINS NF NF NF NF

[ketchenany]

I sold some property and next year I have to claim capital gain.

Adding that amount to my income will result in heafty tax.

I can purchase RRSPs and probably reduce the amount I have to pay.

Anyone have any experience with this?

PM me if you want.

 

Thanks

[John Bacon]

Did you make any capital improvemens to the property? If so, you may be able to reduce your capital gain.

 

If you have owned the property for more than 20 years or so, there can be additional complications due to the life time exemption, spousal residence, etc.

 

p.s. Capital gains are taxes at half the rate of income; however, the full amount of the capital gain affects any kind of social benefits that you may be receiving (GST rebate, old age pension, etc.)

Edited March 22, 2015 by JohnBacon

[ketchenany]

I 'be read that, correct me if I'm wrong.

 

Let's say you invested 30,000 sold for 60,000 your profit is 30,000 you have to pay taxes on half of the profit which would be 15,000.

 

John thanks for your reply. The property was a farm and strictly agriculture and was sold to the farmer that lease it for 25 years. If that makes a difference being what it was.

[Rod Caster]

I'd talk to and pay a good accountant a couple hundred $, if there are any tax reductions, they'll find them for you.

[cram]

You get a one-time capital gains exemption up to a certain amount. You can only use it once, so make sure the # is big enough to justify it.

 

I'm not sure what conditions are attached so best to do your own research or hire an expert.

Edited March 22, 2015 by cram

[Garnet]

You don't invest in RRSP. RRSP are the tax shelter. And in that tax shelter you might buy ETF, bank stock, GIC, E funds plus many more.

[Raf]

You don't invest in RRSP. RRSP are the tax shelter. And in that tax shelter you might buy ETF, bank stock, GIC, E funds plus many more.

 

he can reduce his taxable income, therefore his tax bill, by investing into an RRSP.

 

i would talk to an accountant for sure if this is a significant amount of change.

Edited March 22, 2015 by Raf

[BillM]

The RRSP is just the container, what you invest in is completely up to you. If he's got any room on his assessment, that's exactly what I'd do to avoid paying tax on those capital gains.

[fishnguy]

The RRSP is just the container, what you invest in is completely up to you. If he's got any room on his assessment, that's exactly what I'd do to avoid paying tax on those capital gains.

 

+1

[Shloim]

You need the OAC Ontario Accounting community. But they don't know much about fishing...

[John Bacon]

You get a one-time capital gains exemption up to a certain amount. You can only use it once, so make sure the # is big enough to justify it.

 

I'm not sure what conditions are attached so best to do your own research or hire an expert.

 

There used to be a $500,000 life time capital gains exemption; but that was eliminated back in the early to mid nineties.

 

When it ended, tax payers had the option of declaring the gain to that date and then using the exemption to avoid tax on the gain.

 

That may be what you are referring to.

[topraider]

The 500K exemption still exists, its even higher now (800K). The things that it can be claimed on has narrowed however. The list includes "qualified agricultural property", which is probably aimed at farmers NOT speculators. You can use the 800K exemption as many times as you want, but the total claimed on all things during your lifetime can't exceed the limit. If you have claimed certain kinds of losses in the past, or claimed large interest expenses, watch out.

 

My advice to you is to find out whether the property you sold qualifies as an agricultural property under the income tax act. Google is your friend. If it does, consider finding a professional with experience in this area - that is, an accountant that deals with farmers.

[Rod Caster]

 

 

My advice to you is to find out whether the property you sold qualifies as an agricultural property under the income tax act. Google is your friend. If it does, consider finding a professional with experience in this area - that is, an accountant that deals with farmers.

Yep! There are capital gain exemptions for disposed farm land, but it may need to be considered a commercial farm.