This above is a simple mathematical calculation of the surplus value. But can also dive even deeper to reduce the amount of capital gains you’d claim on your tax return (more on that below).

So it is not the case that capital gains are taxed at a rate of 50%, but it is that 50% of capital gains are taxable. And the rate of capital gains tax depends on the level of your income. You add the capital gain to your income for the year, including money you receive from your job, sideline activities, dividends on unrecorded accounts, any asset sales, and so on.

Capital gains are taxed as part of your income on your personal tax return. Below are the federal tax brackets for 2022, which can give you an idea of ​​how much tax you may owe for the year. You must also calculate the provincial tax bracket rate for your province or territory. Since Canada has a tiered tax system, you’ll need to do a little math to estimate your annual income tax, splitting your total tax into the brackets and the amount owed for each bracket.

And to really calculate down to the penny how much you ultimately owe, you must of course file your tax return and receive a tax bill.

Annual Income (Taxable) Tax BracketsTax RatesMaximum Taxes per BracketMaximum Total TaxUp to $50,197First $50,19715%$7,529.55$7,529.55$50,197 to $100,392The Next $50,19520.5%$10,289.98$17,819.53 ($7,529,55,506,1429.55100,10,10,95520.5% $17,819.53 + $14,360.58 $155,625 to $221,708Next $66.08329% $19,164.07 $51,344.18 ($32,180.11 + $19,164.07)Over $221,708Over $221,70833%NA

It is worth noting that there may be other factors for calculating capital gains. Here are some articles that take a closer look at some of these specific situations.

Can You Avoid Capital Gains Tax?

It’s not so much that you can avoid capital gains taxes, but that there are CRA rules that you can take advantage of to reduce the amount you may owe. Here are a few:

Exemption main residents

The first is the primary residence exemption. You do not pay tax on the sale of your home, but you must do so for a secondary home or home and/or investment property. According to the CRA, a property is exempt from capital gains tax if it qualifies as a primary residence, if your situation meets these four criteria:

“It is a housing unit, a leasehold interest in a housing unit, or a share in the capital of a housing cooperative that you acquire only to acquire the right to occupy a housing unit owned by that corporation.” property alone or together with another person. “You, your current or former spouse or marriage partner, or any of your children has lived in it at some point during the year. “You designate the property as your primary residence.”

Expense and Expense Accounting

Accountability is also made for expenses and expenses. From your capital gain you can deduct the costs necessary for the sale of the property, such as renovation and maintenance costs, finder’s fees, commissions, brokerage fees, appraisers, legal costs, transfer tax and advertising costs.

This post How it works: Capital gains tax on real estate sales

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