Personal Finance

Property Capital Gains Tax Question

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  • Feb 22nd, 2010 7:05 pm
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[OP]
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Oct 3, 2004
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Property Capital Gains Tax Question

I sold a property last year, the guy paid a 10% deposit.

The final payment and final signing of the papers doesn't happen this later in April of this year.

What do I need to report on my 2009 income taxes? The entire capital gains? or only the 10% deposit? or do I report everything next year?

Thanks.
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Jun 19, 2006
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champ91 wrote:
Feb 21st, 2010 10:43 pm
I sold a property last year, the guy paid a 10% deposit.

The final payment and final signing of the papers doesn't happen this later in April of this year.
The CRA would ask you, "did you enter into a legal obligation to sell the property last year". If the answer is in the affirmative, then you would have to book at least the 10% received as income from last year. If not, then you wouldn't book anything until this year.
What do I need to report on my 2009 income taxes? The entire capital gains? or only the 10% deposit? or do I report everything next year?
You could book it as a capital gains reserve transaction. And of course, you'd have to do the usual adjustments for capital cost allowance, etc. Suggest you get professional advice if you're not familiar with the tax return end of things.
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Aug 19, 2001
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champ91 wrote:
Feb 21st, 2010 10:43 pm
I sold a property last year, the guy paid a 10% deposit.

The final payment and final signing of the papers doesn't happen this later in April of this year.

What do I need to report on my 2009 income taxes? The entire capital gains? or only the 10% deposit? or do I report everything next year?

Thanks.
Don't report anything. The deposit is only a deposit, and things can change between now & transaction completion. (e.g. if the transaction doesn't complete the deposit may be returned to buyer or it may be forfeited to you as damages).
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Dec 28, 2007
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Waterloo
"Claiming a reserve

When you sell a capital property, you usually receive full payment at that time. However, sometimes you receive the amount over a number of years. For example, you sell a capital property for $50,000 and receive $10,000 when you sell it and the remaining $40,000 over the next four years. If this happens, you may be able to claim a reserve. Usually, a reserve allows you to report a portion of the capital gain in the year you receive the proceeds of disposition."

http://www.cra-arc.gc.ca/E/pub/tg/t4037 ... P279_29831

I Think Pitz is right. I believe this is what he is referring to, in your situation you would claim just the 10K now. If the deal falls through and deposit is returned, you would either amend or take capital loss and carry back. But again, seek professional advice, although RFDers like to talk like they know everything :D , our opinions are still only worth what you pay for them...
"Claiming a reserve

When you sell a capital property, you usually receive full payment at that time. However, sometimes you receive the amount over a number of years. For example, you sell a capital property for $50,000 and receive $10,000 when you sell it and the remaining $40,000 over the next four years. If this happens, you may be able to claim a reserve. Usually, a reserve allows you to report a portion of the capital gain in the year you receive the proceeds of disposition."

http://www.cra-arc.gc.ca/E/pub/tg/t4037 ... P279_29831
[OP]
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Oct 3, 2004
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Thanks.

I will seek some professional tax advice.
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sods wrote:
Feb 22nd, 2010 7:36 am
"Claiming a reserve

When you sell a capital property, you usually receive full payment at that time. However, sometimes you receive the amount over a number of years. For example, you sell a capital property for $50,000 and receive $10,000 when you sell it and the remaining $40,000 over the next four years. If this happens, you may be able to claim a reserve. Usually, a reserve allows you to report a portion of the capital gain in the year you receive the proceeds of disposition."

http://www.cra-arc.gc.ca/E/pub/tg/t4037 ... P279_29831
Also from that article:

When do you report a capital gain or loss?

Report the disposition of capital property in the calendar year (January to December) you sell, or are considered to have sold, the property.


The OP only has a contract to sell at a future date. The property will not be considered sold until April '10. Until april the OP enjoys full benefit of owning the property.
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May 24, 2006
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No, you don't have to report it since title has not been transfer, sale is not legalized yet.

The CG reserve isn't relevant in this case as this is just a deposit, not a down payment since the sale is still not certain.

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