Saturday, 4 January 2014

Condos and Capital Gains – Dealing with Revenue Canada And Tax Filings on Sale

When you sell a condo which you hold for investment purchases and achieve a capital gain or a profit, you will record this profit as business income on your tax returns. The proper way to account for a capital gain is to take the expense of the property and use that to apply against the value obtained on the sale of the property.

For Instance if you sold a condo property for $100,000 and had purchased that condo for $80,000 dollars, you would have a capital gain of $20,000 dollars.

Now when you record a capital gain on your tax filings with Revenue Canada, you get a little break that the government gives to people that engage in trade. So that only half the capital gain is taken into income. For instance if you make a $20,000 dollar gain, only 50% of this gain is actually taken into your business income on the tax form.

Of course you will include all the supporting documentation for the government to verify the transaction. In addition any income that you derived from the property less the expense to maintain it will also be taken into your income for any specific time period.

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