Sale of a Property

Determining the Tax Treatment of the Property

• Is the property considered income or capital?
• Income is taxed on the full gain, while capital is taxed on half of the gain.

Factors to Consider

• Intention: What was your intention for the property?
• Feasibility: Was your intention for the property feasible?
• Extent of carrying out intention: Did you follow through with your plans for the property?
• Geographical location: Does the location align with your intention?
• Nature of profession: Does your profession make it plausible for you to deal in real estate?
• Length of ownership: How long did you own the property?
• Surrounding individuals in real estate: Do people around you deal in real estate?
• Factors motivating the sale: Consider external factors that influenced the decision to sell.
• Previous Real Estate Dealings: How often have you sold real estate previously?

Calculation of Profit or Loss

• Capital Property: Proceeds - Adjusted Cost Basis (ACB) - Outlays = Gain
• Business Property: Sale Price - Purchase Price - Expenses to Sell = Gain

Principal Residence Exemption

• Live in the property to claim exemption against the gain.
• Exemption calculation: (Years lived + 1) / Years Owned
• Must meet qualification criteria.

Rental Property and Business Property

• Rental property gain is calculated as a capital gain.
• Flexibility in calculating gain if the property was previously a principal residence or rental property.
• Business property gain can be deferred by purchasing another business property.

Foreign Property

• Treatment can depend on the country's tax treaty with Canada.
• The cost of property is its fair market value on the day of immigration for new immigrants.

Farm and Fishing Properties

• Lifetime capital gains exemption can be claimed for these properties.

Planning for Property Sale

• Use capital gains reserve to defer gain if money is received over a specified period of time.

Note: This summary is a high-level overview and there are many variables to consider in each situation.