Whilst I have no plans to sell any of my Canadian properties, I`d like to understand how CGT works in Canada. Assuming I had minimal income that year that I sold a property in Canada, what tax rates would probably apply? Is there a CGT discount for holding properties for a minimum amount of time? Is it just a Federal tax or do the provinces stick their paws out too? Can you defer or rollover CGT into another property purchase?
QUOTE (LongWayFromHome @ Nov 20 2007, 10:43 PM) Whilst I have no plans to sell any of my Canadian properties, I`d like to understand how CGT works in Canada. Assuming I had minimal income that year that I sold a property in Canada, what tax rates would probably apply? Is there a CGT discount for holding properties for a minimum amount of time? Is it just a Federal tax or do the provinces stick their paws out too? Can you defer or rollover CGT into another property purchase?
Good evening,
As a broad overview (there are a great many nuances and you should discuss these with your accountant) where you have a capital gain you will be essentially taxed on 50% of your gain. The actual tax rate will depend on the amount of income and your marginal tax rate assuming that you own the property personally (a few more details where owned corporately). The tax rate will also for example be influenced by the province you reside in if you are resident of Canada, otherwise there is basically a non-resident rate which in theory covers the federal and provincial rates. Thus, as you can tell the provinces do enjoy their take as well.
In terms of holding periods triggering different tax rates, this is not applicable in Canada as compared to the US and I expect other countries. While there are some rollovers available in Canada, these are very restricted at this time. However, there`s a ray of hope in that the federal Tories when originally elected did mention a couple of lines in their election booklet something to the effect that they were considering a deferal/rollover of gains on dispositions. Exactly what this meant, who knows. But I`d like them to put some legislation together to give us a chance to explore! Feel free to remind your closest Tory MP.
http://www.cra-arc.gc.ca/E/pub/tg/t4037/t4037-e.html This link will take you to Revenue Canada`s guide regarding capital gains.
A strong caution if I can, just because you sell a property doesn`t mean you have realized a capital gain. It may in fact be treated as "income" and thus you would pay tax on 100% of the profits as compared to 50%.
I hope that this gets you started.
Warm regards...
George
Good evening,
As a broad overview (there are a great many nuances and you should discuss these with your accountant) where you have a capital gain you will be essentially taxed on 50% of your gain. The actual tax rate will depend on the amount of income and your marginal tax rate assuming that you own the property personally (a few more details where owned corporately). The tax rate will also for example be influenced by the province you reside in if you are resident of Canada, otherwise there is basically a non-resident rate which in theory covers the federal and provincial rates. Thus, as you can tell the provinces do enjoy their take as well.
In terms of holding periods triggering different tax rates, this is not applicable in Canada as compared to the US and I expect other countries. While there are some rollovers available in Canada, these are very restricted at this time. However, there`s a ray of hope in that the federal Tories when originally elected did mention a couple of lines in their election booklet something to the effect that they were considering a deferal/rollover of gains on dispositions. Exactly what this meant, who knows. But I`d like them to put some legislation together to give us a chance to explore! Feel free to remind your closest Tory MP.
http://www.cra-arc.gc.ca/E/pub/tg/t4037/t4037-e.html This link will take you to Revenue Canada`s guide regarding capital gains.
A strong caution if I can, just because you sell a property doesn`t mean you have realized a capital gain. It may in fact be treated as "income" and thus you would pay tax on 100% of the profits as compared to 50%.
I hope that this gets you started.
Warm regards...
George
Thanks guys. Sounds like I should stick to my original plan - keep them a very long time 
QUOTE (ToddStokowski @ Nov 22 2007, 02:12 PM) To add to what George mentioned, if you are a non-resident, there are different Laws and tax rates that apply.
From reading some of your other questions, it appears as though you may be a non-resident.
If so, you should get some qualified tax advice before you keep going on your journey.
Todd
QUOTE (ToddStokowski @ Nov 22 2007, 02:12 PM) To add to what George mentioned, if you are a non-resident, there are different Laws and tax rates that apply.
From reading some of your other questions, it appears as though you may be a non-resident.
If so, you should get some qualified tax advice before you keep going on your journey.
Todd