19 November 2012 ~ 0 Comments

Paying Capital Gains on Assigment Sales and Investment Condos

A little while back The Globe and Mail published an informative piece titled “House flippers beware. You can’t always sell your residence tax-free” which I posted a link to from my facebook page See article here.

This had me thinking of purchasers who buy pre-built condos and for whatever the reason, either sell them upon registration of the condo corporation or through what has lately been defined as ‘the underground real estate market- assignment sales’.

Over the years I have assisted many clients with the purchase of investment condos and have provided some basic principals to consider when determining if and how you property will be treated from a tax perspective. You should always seek professional guidance about your tax matters from a tax professional. The waters can become pretty murky so I highly recommend it.

In the past few years the Canada Revenue Agency has been looking closer at new condo sales and resales making sure that people are properly paying tax if required. We have fairly generous capital gains laws and in my opinion it is well worth the small price you pay for a gain in wealth. One area some of my clients seem the most confused on is selling their unit before the registration date (builders approval required) and is the gain taxable? In our escalating real estate market, I have typically been told that it is taxable. How the taxable amount is calculated can be tricky so make sure you fully investigate what it is you would owe as I hear the penalties are quite harsh for not reporting properly.

Taxable benefits have always been a crucial part of my investment planning so make sure that you understand all of the details in advance.  Otherwise it can spoil what could be a highly beneficial investment opportunity.

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