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Submitted by Sam on
So, you just sold your condo, you made a hefty profit and know you have to pay your taxes.
The bill might be more than you think.
If it’s your principal residence, there’s no tax, as long as you have the paperwork to prove it. The Canada Revenue Agency is taking a closer look at the condominium sector in what some in the industry have dubbed the “Condo Project" and as a result, you might want to think very carefully about how you record that housing sale you made in 2012.
Even if you own up to it being an investment property, you may not be allowed the capital gains tax break and that means a bigger hunk of your profit going to Ottawa.
Let’s say your gain is $100,000 and your tax bracket is 46%. Capital gains are taxed at 50% so you would only owe $23,000 on that profit.
Not so fast! If the CRA says you are in the business of flipping condominiums, get ready to pay based on the gain being counted as income for a tax bill of twice the amount at $46,000. And, it gets worse. You could also face a fine of up to 50% of the tax owed for making a false disclosure.
Submitted by Mase on
If you invest in real estate with partners, there are important things you need to discuss in advance. This will protect you later from costly legal or accounting fees.
Here are some of the main things to consider:
Who is going on title?
If it is your first investment, I suggest that all partners be on title to the property, in their personal names, as opposed to a corporation. A lender will want all the partners to sign personally for the mortgage, so there is little advantage to spending the extra money to incorporate, with additional bookkeeping fees and tax returns. You can always get insurance to protect against claims related to liability.
How are decisions going to be made?
Key decisions include who to accept as a tenant and which renovations to undertake. Most of them should have majority approval, but in some cases, you may require decisions to be unanimous, to protect all of the partners.
Who signs the cheques?
Maison Valley consists of Mase Dhirani and Sam Valimohamed, two top-producing RE/MAX Ultimate agents, who specialize in the various aspects of both residential and commercial real estate including selling properties, acquiring for buyers, investments & property management.
