Achi news desk-
A new capital gains tax increase, aimed at Canada’s highest earners, is causing frustration for some Albertans with second homes or cottages, according to a real estate broker.
Starting on June 25, the tax will increase from 50 percent to 67 percent for those making more than $250,000 in capital gains.
“It’s going to have an impact without a doubt,” said Jim Jardine, an associate broker with Trilliant Real Estate Group.
“We don’t have time to get it on the market and sell it by the deadline we were given.”
Jardine specializes in selling recreational properties and has already spoken to at least a dozen people who are trying to figure out whether they should sell their second property or hold on to it.
The government said the change will affect the wealthiest 0.13 percent – about 12 percent of Canadian corporations – and Canadians with an average income of $1.42 million.
How much is the tax?
Here is an example of how the tax increase will affect those selling a holiday home:
If a vacation home is bought for $250,000 and later sold for $750,000, under current tax rules that would be a capital gain of $500,000. At 50 per cent, the taxable capital gain would be $250,000.
However, on and after June 25, 2024, that same cottage would be subject to a 50 percent tax on the first $250,000 of capital gains and an additional 66.7 percent tax on every dollar above $250,000.
The taxable earnings on that one cottage would rise from $250,000 to $291,750.
“May (when) we’re going to hit prime recreational sales time and I can tell you right now, I don’t have a lot for sale,” Jardine said. “There’s a lot of frustration about what the implications are.”
Evelyn Jacks, president of the Information Bureau and author of 55 tax books, recommends that people do not rush to make a decision and talk to a tax expert.
“This is a huge tax increase, and it’s going to affect a lot of people,” he said.
“I think what’s really important is that people get good solid advice and look at the numbers the numbers are going to tell the story.”
