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Ehouse411.com reporter on the issue of self-housing and a number of real estate tax returns, an exclusive interview with IMPACT accounting firm partner, Centennial College tax professor, chartered accountant Hua Wei.
China Reed accountant said that on October 3, 2016, the Canadian National Inland Revenue Service (CRA) issued new regulations on the sale and sale of home ownership (principal residence) for all types of people:
Canadian tax residents who sell their own homes are exempt from VAT. However, a family can only own one house, if you have more than one house, you must designate one of them (eligible) as your own house.
Self-housing sold after January 1, 2016 must declare the year and amount of the purchase and purchase in the tax return, and specify the year in which the house is self-housing before it can be exempted from tax. If it is not specified in time, or if there is any modification, the maximum fine will be up to $8000 or a fine of $100 per month of delay in reporting.
In other words: you bought a house for 10 years, you only lived for 9 years, the Inland Revenue Bureau can give you one year, which is equivalent to 10 years for you to live on. That is, (1-9) / 10-100% self-occupied, all tax-free.
But the new rules stipulate that anyone who buys a property after October 3, 2016 must be a tax resident at the time of purchase in order to enjoy the + 1 given by the Inland Revenue Bureau.
If Xiao Zhang earns 800000 from buying a house, 25% of the added value will be taxed as the base, that is, 25% of the 800000 will have to pay about 25% VAT, that is, 50, 000 tax must be handed over to the Inland Revenue Department.
Of course, under the same conditions, if Xiao Zhang chose Changdeng to become a tax resident in 2016, or buy a house in January 2017, he would not have to pay the 50,000 tax.
Lao Li owns two properties, a detached house and a vacation house, which were bought and held as follows, both of which were sold in 2016. The independent house earned 800000 and the vacation house earned 600000. According to the rule that only one property can be used as self-housing every year, different methods of filing tax returns after sale will make a big difference:
Detached house, holiday house.
Purchase time 1984 2000.
Time of sale 2016 2016.
Profit $800000 $600000.
Number of years 33 17.
Rule: only one property can be used as self-housing each year.
Method one, Lao Li took the year 2000 as the boundary. Before 2000, he took the independent house as self-housing, and since 2001, he has used the holiday house as self-housing. As a result, the part that needs to be declared is $363636.
Tax return method-independent houses and holiday houses.
As self-housing time 1984 to 2000 2001 to 2016.
Tax exemption amount (1: 17) / 33 million / 800000 = $436364 (1 / 16) / 17 million / 600, 000.
Tax exemption totaling $1036364.
The taxable amount is $800000, 600000, 1036364, 363636.
Second, Lao Li simply and rudely uses the independent house as his own housing, and the part that needs to be declared is $529, which is more than 160000 more than the first one.
Tax return method 2 detached houses and holiday houses.
As self-housing time 1984 to 2015 2016 to 2016.
Tax exemption amount (1: 32) / 33: 800, 000 = $800000 (1: 1) / 17: 00, 000, 000: 70588.
Tax exemption totaling $870588.
The taxable amount is $800000, 600000, 870588, 529412.
Case 3, if Lao Li sold his independent house in 2014 to earn 800000, and made a tax return on his own house, what would be the difference between selling holiday homes in 2016?
Tax return situation 3 independent housing estates holiday homes.
As self-housing time 1984 to 2014 2015 to 2016.
Duty-free amount of $800000 (1 / 2) / 17 / 17 / 600000 / 105882.
Tax exemption totaling $905882.
The taxable amount is $800000, “600000,” 905882, “494118”.
The result: the amount required to file a tax return is $494, 118, more than 130000 more than method 1.
To sum up, the reporter learned from this lesson:
1. You’d better be a Canadian tax resident in the year when you buy a house, and your own house can be completely tax-free.
two。. The sale of multiple properties should be planned in advance in order to minimize taxes.
3. If you can’t figure it out yourself, it’s important to find an accountant who knows how to plan.