Selling Vancouver Revenue Property

Steve Saretsky -

Selling your Vancouver revenue property? There are some extremely important things to note, especially if you’re new to the whole investment thing.

The market is extremely hot, investing in real estate is becoming a huge trend. What many don’t know are the tax implications regarding investment properties. Let’s break them down here.

First off, any investment property, where it’s not your primary residence you will need to pay what’s called a capital gains tax. Basically, when you go to sell your investment property you will need to pay tax on the profit you made.

So let’s say you purchased a Vancouver condo in 2010 and now you are selling it. You sell it and you made $100,000 profit. Capital gains are taxed at 50%. Let’s say your tax bracket is 46%. This would mean you owe $23,000 on that $100,000 profit.

However, if you’re in the business of flipping properties it falls under a different tax law. If you’re flipping properties you would have to pay the full tax on it. Therefor you would be taxed the full amount, which means on the $100,000 you made by flipping it you would end up paying $46,000 since your tax bracket is 46%.

As an investor you should also know real estate commissions are tax deductible. It’s also important to take into consideration your income for the year you are planning to sell. What I mean is, let’s say you’re retiring and you won’t be making much money that year, this would be a good time to sell because your tax bracket is lower, thus you won’t be giving away as much of your profits. On the flip side if you’re selling your investment property in the peak of your career where you’re making the most money and highest tax bracket that probably isn’t the best time to sell.

This should be a good starting point for all investors. If you want to know more I always recommend reaching out to a Vancouver accountant.

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