How Do I Avoid or Defer Capital Gains Tax on Investment Property in CANADA? Any Help Much Appreciated…?
March 6, 2010 | In: Investments
I own a house, where I live, and an apartment to rent. I am thinking of selling the condo, and no way to avoid paying capital gains would be great. Maybe give a relative and let them sell it as your primary residence?? Thanks antemano.Tenga note that tax laws are different here in Canada from the U.S..
3 answers
quizzard123
March 6th, 2010 at 11:50 pm
Any non arms length sale has to be at market value, triggering the capital gain anyway.
There is no legal way to avoid the capital gain tax, I’m afraid. Unless you’re willing to sell it for less than it’s worth (arms length only)
CHARLES R
March 7th, 2010 at 12:21 am
Quizzard’s correct.
However, you might be able to lessen the impact of the sale by using some of the net proceeds of the sale to top up your RRSP.
This would have the impact of efectively lowering your income for tax purposes and reducing the amount of tax owing on the sale.
hobbit
March 7th, 2010 at 12:47 am
OK there is a way in which you might be able to defer capital gains taxes. You might not like it though.
If you have a gain in non farm property and do not receive all the proceeds for up to 5 years, you can claim a reserve against the gain.
For example if your gain was 100,000 and the proceeds were 250,000 and you received only 50,000 this year, I believe you effectively would be taxed only on 20 percent of that gain. You might take a look at your tax situation and structure the payments in such a way to lessen the tax bite within those parameters
Check with your accountant for appropriate forms