shares in the corporation. If the property has appreciated in value since its purchase, using Section 85 can defer the taxes owed on the capital gains until the shares are eventually sold. If you sell the property and realize a capital gain of $50,000, you could potentially use Section 85 to transfer the property to a corporation and defer the tax liability on the capital gains. You would receive shares in the corporation in exchange for the property, and the corporation would take over ownership of the property. You could then use the $50,000 to invest in other real estate opportunities . invest that entire amount so you’re not paying the taxes today, and you can purchase a larger property.
RENTAL TAX SPECIFICS
Rental property owners are open to a variety of benefits, which I’ve listed below. You’ll notice that several are the same as for other real estate investments. Also, as with all properties, if you sell within a year of buying, you’ll be taxed at your income rate. If you hold on to a property for a year or more, as is usually the case for rental properties, you’ll deal with capital gains tax, which is a lower rate. Your overall tax deductions can depend on what type of investment business you have (sole proprietorship, partnership, or corporate entity). And, as always, do your research to make sure you’re up-to-date on all the latest tax laws, as these can, and do, change. Rental property tax benefits can be included the followings base on current regulations in Ontario. You will need to consult with your local accountant to verify:
• home office, office supplies, computer software
125
Powered by FlippingBook