💸 Capital gains tax in effect - now what?

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✍ What’s on our mind?

This week, the capital gains tax increase took effect. Despite strong protests from small businesses and entrepreneurs, the government has moved forward saying it will improve tax fairness and increase federal revenue by $19B over five years.

But what everyone wants to know is ‘How does this affect me personally?’

Who will the capital gains changes impact?

Starting June 25, if you have capital gains over $250,000, the inclusion rate is now 67%, up from 50%. All capital gains will now be taxed at the two-thirds rate for corporations.

So, as an individual, for the first $250,000 in capital gains, you'll still pay tax on 50% of the gain (same as before). But for every dollar beyond $250,000, two-thirds will now be taxable.

What does that mean for selling my home?

For your primary residences: No capital gains tax here! If you sell your home for $1 million, that's what you get (minus realtor fees and paying off the mortgage and all that).

But for second properties: You guessed it; you pay tax on 50% of the gains up to $250,000, and 67% on gains above that threshold.

Is this going to impact my investing strategy?

Good news: Some situations won’t trigger a taxable capital gain. For example, profits earned through tax-sheltered vehicles like RRSPs or RESPs are not taxed.

To understand how these changes might affect your investments, it’s smart to talk to a tax professional about the higher rate and its impact on your portfolio.

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