capital gain on selling investment | Income tax filing | Discussion forum

escaleraroy said
I want to calculate how much it's going to my pocket after selling my investment property. I don't want to get a surprise after I sell it. I want to have a rough number so I know what I'm expecting. Let me know if this is correct or do I need any adjustments. Thanks.

Sale price: 570000
50% tax: 285000
capital gain tax rate in BC is around 27%: $76,950
capital gain after tax: 285,000 - 76,950 = 208,050
subtotal gain: 285000 + 208,050 = 493,050
estimate realtor commission: 19,000
mortgage on the property: 200,000
estimate Money going to my pocket: 493,050 - 19,000 - 200,000 = 274,050

I'm a bit confused about this part:
when 274,050 is added to my income (100,000), do I need to pay tax on 274,050?  

Your example forgot the acb for the purposes of calculating capital gain (and taxable capital gain).

Sale price of Investment property $570,000
less: commission 19,000
= Proceeds of disposition $551,000

Adjusted cost base:
Price paid for property (you did not mention cost so estimating here for purpose of calculation) $300,000

Gain is 551,000 - 300,000 or $251,000
Amount added to income is taxable capital gain of 50% x's 251,000 = $125,500

The mortgage is irrelevant for the purposes of calculating gain or loss. It is the adjusted cost base of the property that is relevant.

Also if you made any capital improvements to the property since purchase you can add the cost of those to your purchase price to determine your ACB. This reduces your gain.

Not routine maintenance and repair costs though.

One could learn how capital gains are calculated and taxed. The 2023 Capital Gains Guide from CRA is a source of info and examples.

The calculations provided are completely off.

There's no 50% tax on the gross proceeds of selling a property or an investment like a stock.

Capital gains is the gain, not the gross proceeds one receives from the sale. Selling a house for $570,000 does not result in a $570,000 capital gain unless one somehow acquired the house for a cost of $0.

There's no specific tax for capital gains. Currently, 50% of the capital gain is taxable. 50% of the capital gain is not the tax. The taxable portion of the capital gain is added to one's taxable income that year. One then calculates taxes using the increased taxable income for the year.

escaleraroy, based on your original post I tend to agree it's probably a good idea for you to get an accountant, assuming (s)he's a good one.