Capital gains exemption?

[CashProperty]

Looking for some clarification on this. I was recently told by a financial adviser (who is not an active RE investor) that the capital gains on my rental property would be taxed at 100% and would not qualify for the capital gains exemption due to the fact that the property is under my personal name and is my primary income, thus active (or earned) income. Would appreciate any advice (besides talk to your accountant). Has anyone dealt with this before?

 

[Tina Myrvang]

Please reach out to your accountant to clarify.

 

[Martin1968]

Looking for some clarification on this. I was recently told by a financial adviser (who is not an active RE investor) that the capital gains on my rental property would be taxed at 100% and would not qualify for the capital gains exemption due to the fact that the property is under my personal name and is my primary income, thus active (or earned) income. Would appreciate any advice (besides talk to your accountant). Has anyone dealt with this before

You would qualify for the capital gains exemption if you can prove its been a long term holding prop. Without knowing exactly what the threshold In number of ownership years is for Revenue Canada, I’m just going to suggest 5 years plus but anyone with better info I will welcome your expertise. I recently sold a few buildings, In personal name, RE income is my main source of income, owned for Just about 10 years and got taxed under capital gains exemption.
Home flipping, short term ownership is considered a business activity and thus 100% taxable.
Are you sure you understood your Financial Advisor correct?

 

[Thomas Beyer]

Income from flipping properties is taxed 100% indeed, but holding, or even intending to hold, then selling for a gain, qualifies for the 50% exemption.

Flipping is not defined. Use broad discretion. If it’s a year or less one could argue it’s flipping but if your intention was to hold and you had a 5 year mortgage and a tenant and then someone offered you $250,000 more than you bought it for 3 months later is not flipping.

CRA of course can always audit you. Use common sense.

Change financial advisor on this case as he (or she?) is wrong in his (or her?) opinion !!

Thomas Beyer, Asset Manager & Improver, Hard Asset Investor & DeFi Asset Hodler, Author, Father, Mentor, Hiker, Kayaker www.prestprop.com


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