Need Advice: Taxes on Capital Gains

[cihanlee]

Hey All,

Okay, here is the situation. I have been seaching for a while on how much the government takes on your capital gains. Say this is through mutual funds, the stock market or even a rental property. Also how is it calculated on a yearly basis or is it when you take out your capital gains. Can you guys give me some info on this please. or refer me to the government site.

Thanks in advance.

[notanexpert]

A capital gains tax is payable when the gain is realized, therefore if you have a rental property and you sell it, that's when taxes on the gain are due. It is therefore very much to your advantage to hold things for the long term, for example if you buy a stock, hold it until retirement, you will not pay any taxes on the gains in the price of the stock until you end up selling it many years later. If you need more info, the CCRA website has a lot of it, just google "ccra gapital gains".
m

[notanexpert]

Oh, yeah, one more thing, the rate of tax on capital gains is half of your marginal income tax rate, so if you make around 60k and pay 34% at the margin, the capital gains will be taxed at 17%.
m

[ghostryder]

Oh, yeah, one more thing, the rate of tax on capital gains is half of your marginal income tax rate, so if you make around 60k and pay 34% at the margin, the capital gains will be taxed at 17%.
m

Simplistic but not exactly accurate.

50% of the cap gain is included in your income. Depending on the size of your gain you may cross bracket boundries. If this happens then some of the gain will be taxed in your current bracket and some of it in the next higher.

If your other income is say, $30,000 and you have a $200,000 cap gain half will be included as income (100,000) and then some will be included in your present bracket, some in the $36-$72,000 bracket, and some in the $72-$118,000 bracket and taxed accordingly.

http://members.shaw.ca/RetailInvestor/truths.html#taxrates

[notanexpert]

Ghostryder, you're absolutely right, I was just thinking of the usually miniscule capital gains that I am realising that don't put me in a different tax bracket...

[cihanlee]

thanks for all the help. greatly appreciated

[FrugalTrader]

thanks for all the help. greatly appreciated

I've written a couple of articles on investment taxes in Canada if you are interested. Here is part 1 (http://www.milliondollarjourney.com/how-investing-taxes-work-part-1.htm) and part 2 (http://www.milliondollarjourney.com/how-investing-taxes-work-part-2-dividends-and-interest.htm).

[cihanlee]

excellent articles, frugaltrader, thanks a lot.

[michelb]

Hey All,

Okay, here is the situation. I have been seaching for a while on how much the government takes on your capital gains. Say this is through mutual funds, the stock market or even a rental property. Also how is it calculated on a yearly basis or is it when you take out your capital gains. Can you guys give me some info on this please. or refer me to the government site.

Thanks in advance.

man u got to be one of the dummest ppl on earth.. if you want to know something just read on the internet, takeout a book or two. jeez.

(before you flame me, you should know that I'm just returning the same great advice that cihanlee was kind enough to offer in another thread)