Taxable capital gains
- Reduce any capital gains by any capital losses incurred in the year.
- If you still have a capital gain at this point, claim any capital losses from previous years not otherwise deducted.
- If you have an overall capital loss for the year, consider deducting these losses from any capital gains reported on your prior 3 year’s income tax return or carry them forward until used..
Unpaid funds loaned to a family corporation may qualify as business investment loss.
You may not even know that you have an existing “shareholder’s loan” unless you have completed your corporation’s final set of financial statements and corporation income tax return.
Contact the Canada Customs and Revenue Agency and ask for a printout of your carry forward items.
You might have a loss from a prior year that you forgot to claim.
If you have realized capital gains in the current year and unrecognized capital losses in other investments, consider disposing of the loss investments prior to the end of the calendar year in order to offset the capital gains.
Capital losses can be carried back for three years to recover tax paid on capital gains.
For example, a $100 capital loss in 2015 would trigger a $50 allowable capital loss; if you have no capital gains in 2015, this capital loss could be used to offset a capital gain in any of the three preceding years, from 2012 to 2014.
Defer Capital Gain up to 5 Years
- On a sale where the vendor takes back the mortgage, they may be eligible to defer some of the taxable capital gain at 20% per year and up to a max of 5 years.
It can be used to offset capital gains you realized on other investments that year (and in any of the three previous years), thus reducing your capital gains tax.
Or, you can bank those capital losses to reduce any gains you might realize in the future—a perfect strategy for those who know they’ll be in a higher tax bracket later on, such as a stay-at-home parent who wants to return to work.
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