Buying real estate as an investment is a big step and also one of the most valuable purchases you can make. With enough time and hard work, it can be a great source of income. But, before you start dreaming of becoming a real estate mogul (sounds good, right?), you must first learn the basics. One of the most vital fundamentals of real estate investing is TAXATION! Ah yes, the TAXES! Especially capital gains taxes!
Capital gains tax is due when you sell an asset or investment for more than you paid, with 50% of the difference added to your regular income. In Canada, there are a few exemptions that may allow you to reduce your taxes, depending on several factors. Reflecting on the question, OnTrack Accounting & Bookkeeping, a 2022 ThreeBestRatedÂ® award-winning accounting firm, shares: While opening a registered account to house investments and using the principal residence exemption to reduce l Capital gains tax are two basic approaches to tax savings. There’s more to capital gains taxes you should know:
- You have to report capital gains when you sell property or investments for more than you paid.
- The inclusion rate is the same for everyone, but the amount of tax depends on your total income, your personal situation and your province of residence.
- No capital gain is triggered on the sale of your principal residence.
- Capital gains are calculated based on the market value of the asset sold less the cost of acquiring that asset.
Timing of your transaction:
Timing the sale of your investment assets can be a powerful tax reduction tool.
Charitable donations – Gifts – Donations of assets:
You can use gifts or donations to reduce your capital gains tax. You could save money by donating property that has incurred a loss but that you want to keep in the family. It produces a capital loss that you can apply against gains from other investments.
Lifetime Capital Gains Exemption â LTCGE:
If you own farm property for a long time, its value will likely increase. You can sell and, for example, retire. When this is the case, you may be completely exempt from tax if you sold qualifying property and your earnings amounted to approximately $900.00.
About OnTrack Accounting and Bookkeeping – ThreeBestRatedÂ® Accounting Firm in Oakville
Founded in 2010, OnTrack Accounting is an independent accounting, bookkeeping and tax firm that specializes in helping small and medium-sized businesses overcome their day-to-day challenges by balancing their books, processing payroll and filing their accounts. corporate and personal taxes.
It is a professional tax accounting firm located in Oakville that provides tax planning, accounting and corporate income tax services in the Greater Toronto Area. They work with clients to create an effective tax planning strategy to utilize all granted exemptions and defer capital gains as much as possible.
After receiving the 2022 ThreeBestRatedÂ® award for one of Oakville’s Top Accounting Firms, Mina Hanna, Founder and President of OnTrack Accounting & Bookkeeping, says, âThis is our 5th year in a row! We are very honored and humbled to be one of the ThreeBestRatedÂ® accounting firms in Oakville. I would like to express my thanks and my gratuity to our valued customers who trust our services and, of course, to our team with whom I am very proud to work.
To learn more about OnTrack Accounting & Bookkeeping or their services, visit https://accountingontrack.ca/.
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