Avoiding Capital Gains?

Hi there, I am very novice at all this but wondering if anyone here knows about capital gains tax.

I own my own home, but a couple of years ago I invested in a condo in Pickering. My intention was to rent it out once it was built.
That is no longer my plan and I am thinking of selling it after occupancy, next year.

A couple of people have told me that I can avoid capital gains tax by putting the profits in ...something else...can't remember what. Maybe rrsp's...maybe another property? I tried to google this and came up empty. I called my accountant, who is generally pretty good and he said plain and simply there is no way to avoid the capital gains in this situation.

The people I was talking to said it is something very new- I could be off base- or my friends could be...but does anyone know anything about this?

Thanks in advance :)

Quote:

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Originally Posted by paula0000

Hi there, I am very novice at all this but wondering if anyone here knows about capital gains tax.

I own my own home, but a couple of years ago I invested in a condo in Pickering. My intention was to rent it out once it was built.
That is no longer my plan and I am thinking of selling it after occupancy, next year.

A couple of people have told me that I can avoid capital gains tax by putting the profits in ...something else...can't remember what. Maybe rrsp's...maybe another property? I tried to google this and came up empty. I called my accountant, who is generally pretty good and he said plain and simply there is no way to avoid the capital gains in this situation.

The people I was talking to said it is something very new- I could be off base- or my friends could be...but does anyone know anything about this?

Thanks in advance :)

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If you sell it immediately after occupancy chances are it should be taxed at full rates, rather than the 50% capital gain rate. You should rent it for a period of time before selling in order to only pay 50% tax on it.

You cannot retroactively avoid capital gains tax. Period. End of story. Anyone who suggests that you should try, you should run away from them. They are not the ones that will have to deal with the CRA when you get reassessed.

If you sell, just make sure that you write off every possible legal expense of the property - legal fees for purchase/sale, real estate commission, and mortgage. If you did not get any income from renting it out, then I believe that you should be able to write off the property taxes and condo fees that you paid over the time that you owned it. I am not an accountant - you should definitely consult one if you should sell - but make sure that you have a list of your reasonable fees. Given that it was an investment, then you are able to deduct reasonable expenses that you incurred in carrying the property.

If you rented the property, then you may have already used some of these expenses.

Too many people allow their sell decisions to be unduly influenced by taxes owed. Don't. If you made a profit, then the government gets a cut. The only way to legally avoid that is to avoid making a profit, which is a pretty dumb investment strategy. If you sell, take your profits and pay your taxes. And be glad that you had to pay because you made a profit.

There is no way to avoid capital gains tax.

Secondly you better be careful around renting the condo. The HST could bite you in the ass.