Tax on New Land Purchase
(Near Vanderhoof, BC, Canada)
We recently purchased some land and are having it subdivided and then wish to sell each piece separately.
My question is...will we have to pay capital gains tax or income tax on the money we might get from such sales?
Thank you in anticipation for your help.
Yes, you have to pay capital gains tax on the sale of real estate.
A taxable capital gain is taxed at 50% of a capital gain. This rate is less than tax paid income.
Check out CRA publication ITR456R Capital Property - Some Adjustments to the Cost Base
for costs that can be added to the price of the land such as legal fees and commissions.
You will also be able to claim the outlays and expenses incurred to sell the property ... so keep all your receipts. See How do you calculate your capital gain or loss?
on the CRA website.
Your capital gains will be reported on Schedule 3 and line 127 of your personal tax return if the land is held in your name.
Hope that helps.