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Dear Mr. Ingram,
We are considering buying a farm on Vancouver Island and are looking into subdivision potential. If we are able to subdivide a few portions off and sell them would we be subject to capital gains tax? We already have buyers ready to go and the sales would take place on the date we purchase the farm. Presently the farm land is worth very little but with rezoning the value is much higher. The farm has one large house on it, a few cottages and barns. The cottages are presently rented out.
Would the capital gain be the difference between the original value of the farm land or the value after rezoning and the sale price of the two parcels of land?
SXXXXXXXXX
Victoria BC
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david ingram replies:
If you and a spouse had been actively farming the land for 10, 20 or 30 years and had now decided to sell and subdivision got you the best price, up to $1,000,000 ($500,000 each) profit would be tax free and the rest subject to capital gains tax. (Canada only)
However, since you are buying this property as a developer would and intending to subdivide as you buy, there is absolutely no doubt that "ANY" profits will be taxed at straight income tax rates and not subject to reduced Capital gains rates. This would be the same in Canada or the US.
Goto www.centa.com click on [Tax Guide] fourth down in box on left - Click on the [Capital Gains] section and read 27 pages on capital gains tax in Canada.
You will see actual references to subdivisions and tax.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
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David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 980-0321 - Fax 913-9123 [email protected]
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