Hello everyone! Today I want to share important information about capital gains tax: what homeowners need to know:
It’s now official. Starting June 25, 2024, the capital gains tax rate will be 66.7% for the portion exceeding $250,000. This means that owners of second homes and rental properties will have to pay more taxes when they sell.
📌 My name is Denis Kornienko, I am a real estate expert, and I have been helping young families build a secure future in the Montreal area for over 15 years.
If you are thinking about selling or buying a house or apartment in the Greater Montreal area, contact me – I will be happy to represent and protect your interests.
On my channels, I share the most relevant information about the real estate market in Montreal and its suburbs, where my workday takes place – what’s happening right now.
👉 Subscribe here and on Telegram https://t.me/kornienkomontreal to not miss anything.
👉 My YouTube channel https://www.youtube.com/@denis.montreal
👉 Instagram: https://www.instagram.com/denis.montreal/
Join us.
So, while this change has made headlines, its impact on the housing market should be limited. Here’s what you need to know.
❗ Is it too late to sell real estate before the law comes into effect?
It’s late unless you list your property below market price. Calculate whether the savings are worth it in your case.
❗ Will the announcement of this law scare off buyers?
Unlikely. Just 25 years ago, the inclusion rate was 75%.
❗ Who will not be affected by the new law?
If the house you own is your primary residence, the capital gains tax on its sale will remain the same. Farms or fishing estates are also not subject to tax.
❗ Flip
Those who buy property for a flip – a purchase for quick resale, usually after renovation – typically do not make a profit of 250,000, especially considering renovation costs. Therefore, this category will not be significantly affected.
❗ How to calculate capital gains?
Capital gains are the profit made from the sale of a capital asset, such as land, real estate, stocks, bonds, etc.
To determine how much it will be, you need to establish the difference between the selling price and the purchase price of the asset. For example, an owner who bought land a few years ago for $100,000 and sold it this year for $150,000 will realize a capital gain of $50,000 ($150,000 - $100,000 = $50,000).
❗ How is capital gain taxed?
By law, 50% of the capital gain is taxable. In the example above, the seller will add $25,000 (50% of $50,000) to their taxable income for the year of the sale. However, if the owner realizes a capital gain of $300,000, the first $250,000 will be taxed at 50%, and the remaining amount of $50,000 (the difference between $300,000 and $250,000) will be taxed at 66.7%.
❗ Who will be affected by the new law?
Clearly, those who earn a lot from sales.
As for buyers, they will have to consider the tax implications of this new measure when assessing the value of acquiring property.
Contact me, I will be happy to help with advice, buying, or selling real estate.
Best regards,
Denis (514) 577-0787
Denis Kornienko Real Estate Broker REMAX
