what is captial ganes?

Question

my hubby and his siter own a cottage in ontario, they want to sell it, now to protect his investment, from his ex wife, my hubby signed over the cottage to his siter, everything is in her name, not an issue, it is still "joint"........

my hubby and i do not understand what capital ganes is and what it means, is there anyway to avoide it? what if he took his share of the sale and bought another cottage?.....any differance?

how is the amount of the capital gaines added up?

what else should i be asking or need to know?

oh forgot to say he did not buy it they built it 15 years ago

Answer 1

Capital gain is simply a term used to describe the appreciation on a capital asset. In order to be taxed, capital gain must be both recognized and realized. In other words, recognized and realized capital gain is the money you make on the sale of your house minus its original market value (original value). For exmaple, if at the time when your husband built that house its market value was $1,000 and now he sells it for $10,000, he will have $9,000 recognized and realized gain. In other words, he will have to pay tax (in States, both federal and state) on this $9,000.
The only way to avoid this gain was to include this house into the divorce settlement as to be sold and divided between the former spouses. As I understand it, your husband did not do that. He transferred the property to his sister. You see, you only will have to pay taxes on capital gain if you sell the property. Now his sister has a property with market value $10,000. If she decides to sell this property in the future for $30,000, SHE will have the recognized and realized capital gain of $20,000 and SHE will have to pay taxes on it.

Ways to avoid capital gain:
1. include property into the divorce settlement.
2. Sell or transfer it to a relative.
3. Net it with capital losses.

There are many others. Only your tax accountant will know what is the best strategy for you.

Answer 2

Capital Gains are the profits made from selling a long term investment. For example, if your husband bought the cottage for $1,000.00, keeps if five years and sells it for $2,000.00 he will have to pay taxes on the $1,000.00 profit.

I don't know about Canadian tax laws, but here in the States, capital gains are taxed at a higher rate than income.

Doc

Answer 3

If I gave you $100 and you gave me back $110
the $10 dollars would be capital gains. What you recieve back from what you invest is considered capital gains.

Answer 4

You need to contact a Canadian attorney concerning capital gains laws in Canada.

Answer 5

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Answer 6

I WOULD BE ASKING A TAX CONSULTANT BECAUSE I DO KNOW THAT REINVESTMENT REDUCES OR ELIMINATES CAPITAL GAINS IF DONE IN A TIMELY MANNER ,, CAPITAL GAINS IS THE AMOUNT YOU RECIEVE OVER AND ABOVE WHAT WAS OWED BY YOU ON THE PROPERTY, BUT CHECK WITH A TAX CONSULTANT BECAUSE DIFFERENT STATES HAVE DIFFERENT LAWS ON INHERITANCE.

Answer 7

Are you Canadian? If so, check with Revenue Canada's website. It would be 'capital gain".

Good luck.

Answer 8

capital gains is the 'net' income you receive/ income+expenditures=capital gains