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I'm canadian who want to understand capital gains tax rate.

Customer Question
Hi, i'm canadian who want...
Hi, i'm canadian who want to understand capital gains tax rate.I have a rental house that i bought at 500K. I sold it after 9 yrs at 1100K. With the money, i bought a new house (will be my primary residence) at 95K. In this case, does capital gains push my income tax bracket? if so, how much?
Submitted: 2 months ago.Category: Tax
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Customer reply replied 2 months ago
sales and purchase of properties happened within a couple of months.
Customer reply replied 2 months ago
sry, new house bought at 950k
Answered in 6 hours by:
12/3/2017
Tax Professional: Barbara, Enrolled Agent replied 2 months ago
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 4,795
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

In Canada, 50% of realized capital gains are taxable in Canada at an individual's tax rate.

Based on the information you provided, your gain on the sale of the rental is $600,000. The personal income tax rate is 33% of taxable income over $202,800.

You will pay 33% on $300,000 (50% of your total gain of $600,000).

The fact that you purchased a primary residence for $950,000 will not defer the requirement to pay tax on the sale of the rental property.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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Customer reply replied 2 months ago
Thanks for reply. I live in ontario. In this case, dont we have to add 13.16% (top tax bracket) provincial tax rate to the 33% for capital gains tax rate? Thus making it 56.16%?Also. If i have 350K mortgage for the sold house, does it affect anything?
Tax Professional: Barbara, Enrolled Agent replied 2 months ago

Unfortunately, the mortgage payoff of $350,000 does enter into the calculation.

As to the Ontario provincial tax rate, you will pay 13.15% on your total income, which includes 50% of the capital gain amount.

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Customer reply replied 2 months ago
Thank you for the reply, i have a couple of more questions ...Does this mean that my original income (before capital gains) will be affected by the (provincial) income tax bracket modified by capital gains? From other web sites and forums, i had an impression that the original income would not be affected by the new tax bracket.Also, from you response, am i correct to assume that final capital gains tax rate will be 33% (federa) + 13.15%(ON provincial) = 46.15%?
Tax Professional: Barbara, Enrolled Agent replied 2 months ago

The amount of tax you pay depends on your total income, personal situation and your province of residence. As I mentioned, 50% of the gain is subject to capital gains tax.

Try this calculator: https://www.icalculator.info/canada/finance/capital-gains-tax-calculator/annual.html

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