The improvements you make over the years to a cottage or investment property can save you on taxes when you sell.
Tax expert Armando Minicucci recalls an interaction with a client who sold a secondary property and was in a panic about what was seen as a big tax liability. Improvements are distinct from maintenance and upkeep, which are about keeping the property in its original condition. Mr. Minicucci said improvements upgrade the property, and cited examples such as having a garage or an addition built.
Now, for a quick example of an ACB calculation for someone who bought a cottage many years ago for $300,000 and paid $5,000 in closing costs. Over the years, they added improvements costing $100,000, bringing the adjusted cost base to $405,000. This amount would be subject to the Canada Revenue Agency asking for more details on the improvements made.
You’ll also want to use ACB when calculating the capital gain on the sale of securities such as stocks and funds. Monthly or quarterly statements from investment companies typically provide the book value or book cost for account holdings, which is the same as ACB.
Business Business Latest News, Business Business Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: globeandmail - 🏆 5. / 92 Read more »
Source: globeandmail - 🏆 5. / 92 Read more »