Zolo’s New Guide Reveals Strategies to Reduce Canadian Capital Gains Tax

Vancouver, Canada, 2021-Apr-28 — /EPR Network/ — Capital gains can have a significant effect on your income taxes. To reduce this tax burden, Zolo created an essential guide to Canadian capital gains tax. The guide helps taxpayers get a better understanding of what triggers capital gains tax, who has to pay it, along with strategies to avoid or reduce the amount owed.

[Find the guide here] + [Infographic]

Did you sell an asset in 2020 and are now wondering if you’ll have to pay capital gains tax — and if so, if any loopholes exist to avoid doing so?

You are not alone.

The pandemic created a challenging year for everyone, resulting in financial uncertainty across the country and world. With Canada’s tax return deadline rapidly approaching, millions of Canadians have questions, including those circulating around capital gains tax.

That is why Zolo published an in-depth guide to help you get the most out of your return.

Canada is one of the few countries that does not have a capital gains tax on a household’s primary residence. A capital gain occurs when you turn a profit on the sale of assets, such as property, stocks, bonds, or certain types of businesses, and taxed at 50%. You then multiple your taxable earnings by a set marginal rate — or annual tax bracket.

For example, if you sold your cottage in 2020 and your earnings put you in the 33% tax bracket, you deduct the original price and any associated costs from the selling price. If you made $100,000 on the sale, $50,000 of that sale would be taxed at 33%.

The calculation would be:

$100,000 x 50% = $50,000

$50,000 x 33% = $16,500 (which is the tax you will owe)

If you want to avoid paying capital gains tax related to real estate, you have two options. You can either sell the asset at a loss or sell your principal residence.

To legally reduce or avoid paying capital gains tax in Canada, here are a few additional strategies:

• Use capital losses to reduce capital gains. This is achieved through tax-loss harvesting.
• Sell your principal residence. This asset is sheltered through the Principal Residence Exemption.
• Donate your assets or shares to charity, such as ownership of stocks.
• Carry over your losses.
• Sell a farm or fishing property. (Canada Revenue Agency (CRA) explains these special capital gains rules).
• Use tax advantages accounts.

It’s also important to understand some of the most common capital gains tax myths and get professional tax advice.

 

About Zolo

Zolo is one of Canada’s most popular national real estate marketplaces. Each month, over 10 million home shoppers use Zolo to level up the way they buy, sell, rent, finance, and learn about real estate.

https://www.zolo.ca

 

Press Contact

For more information or to schedule an interview, please contact:

Nicole Sullivan

Outreach Specialist at Zolo

Nicole.sullivan@zolo.ca

416-895-5407