How are capital gains tax calculated in Vancouver & Canada?
Table of Contents
- So here is a simple definition of Capital Gains Tax
- How to Calculate Capital Gains Tax
- Questions Pending
I just wanted to share a question that is always asked by many of our clients and provide you with an answer on how you can calculate capital gains tax in North Vancouver and Canada. But before I go ahead to explain the simple methods to you, I will explain what capital gain tax means first so you can gain an insight into what am about to share with you.
So here is a simple definition of Capital Gains Tax
Capital gain tax is the tax you pay on half the profit you make while selling a Vancouver property. What this means is that if you sell your property for let’s say $500,000 and you made a gain or profit of say $300,000 then you will only be taxed half the amount you have gained, which is $150,000. This is the simplest definition of capital gain you can find anywhere! Now that you have an understanding of what capital gain tax is let us look at how to calculate it.
How to Calculate Capital Gains Tax
To calculate capital gain tax all you need to know is a simple formula which is; net sales proceeds minus the cost equals gain or profit. Allow me to explain.
The net sale proceeds is the selling price for which you made the sale or are willing to sell the Vancouver home and this includes commissions to realtor and lawyers.
Also the cost is the amount of money you paid to get the property in the first place and this includes land transfer tax, improvement cost on the property (any renovation work on the structure of the property, (ie changing the roof, kitchen renovation, etc), legal fees and so on.
The gain or profit is the amount of money you have left when you subtract the cost of acquiring (and improving) the property from the selling price of the property.
I think with the simple explanation above you should be able to understand how to calculate capital gain tax on your own although there are several other steps to take finally do the calculations but I think this understanding this simple and powerful formula will do a lot of help to you.
If you have any questions feel free to give me a quick shout: 604-767-3703.
I am always here to help!