The Capital Gains Blog

Archive for the ‘Capital Gains Exemption’ Category

Question: Is there a Capital Gains Exemption in the US like in Canada if you sell a company?

I’ve been working in the US for a few years and paying US taxes. I have equity in a Canadian firm that maybe sold, potentially resulting in a large capital gain. In Canada there is a 500k lifetime Capital Gains Tax exemption. Is there anything similar to this in the US? Being a Canadian citizen is there anyway to leverage that Cdn tax exemption?

Thanks for your help.

Answer: No. But there is a reduced rate for capital gains taxes as opposed to regular income tax. But the transaction may not be subject to US tax; consult a tax advisor on this.

Centerra Gold Reports First Quarter Earnings of $0.52 per share

(This news release contains forward-looking information that is subject to the risk factors and assumptions set out on page 13 and in our Cautionary Note Regarding Forward-looking Information on page 15. All figures are in United States dollars.)

Question: Capital Gains on Primary Residence?

Hello,

If you renting rooms in your house and it is your primary residence, and then you sell the house, do you still get the Capital Gains Exemption ?

Answer: Sheri G’s answer is absolutely wrong in Canada, where you posted your question.

The portion of the house you are renting is NOT considered your personal residence. It incurs a Capital Gain Or Loss when it is sold.

Calculating the ACB on that portion of the property is a but tricky, as it depends on the value of the house when you started renting rooms.

More details here:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/rsdnc/chngs/menu-eng.html

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/rsdnc/chngs/chngngprt-eng.html

http://www.cra-arc.gc.ca/E/pbg/tf/t2091_ind_-ws/README.html

http://www.cra-arc.gc.ca/E/pub/tp/it120r6/it120r6-e.html

New Laws Taking Effect Today

There are dozens of new laws taking effect today in Virginia.

Question: If me and my mother buy a house together and both use it a a primary residence, can we avoid Capital Gains Tax?

If me and my mother buy the house and live there for two years as a primary residence. Can we qualify for the $500,000 capital gains tax exemption that married couples qualify for? What about an unmarried couple in general?

Answer: The $500,000 limitation applies only to a married couple filing jointly. For all others, the limit is $250,000 per tax return. Since you and your mother would not be filing with each other, you would EACH qualify to exclude up to $250,000, assuming that neither of you is married.

Question: Tax liability in the US for capital gains from property sale in India?

Hi,

I have been in the US for the last 2 yrs, first on a F-1 and now on an H-1B visa.

I recently sold a property in India and had some capital gains which I plan to invest in another residential property there. As a result I am claiming a Capital Gains Exemption in India.

Is there any tax liability on these capital gains in the USA? I would appreciate if you could also send me the sources for your response.

Answer: You may be considered a US resident alien. If so, US residents are taxed on their worldwide income. You would have to report the capital gain on your US Form 1040, Schedule D. If you held the land for over a year, you would have a “long-term” capital gain on the sale. Long-term capital gains are taxed at either 5% or 15%, depending on what tax bracket you are in.

http://www.irs.gov/businesses/small/international/article/0,,id=96493,00.html

Vuelta 2010: First Impressions

While much, much work remains to be done to bring the race to the States, and there’s certainly no guarantee that RCS Sport will bite, the idea got us thinking: What does it take to organize a major race in North America?

McCain 08

Question: Should I take advantage of the real estate capital gain exemption?

We are getting ready to purchase another house as our new primary residence. Our plan at the moment is to keep the current house and rent it out. Since we bought this house 10 years ago it has appreciated nearly $170K. My understanding is that we have a $250K tax exemption from capital gains available as long as we sell the old house within three years of moving into the new house.

So my net question is: What is the key criteria for making the decision to keep the old home beyond the three year threshold? I guess the trade-off is between the Capital Gains Exemption and potential longer-term appreciation on the rental house. But I want to make sure I am not missing anything else…

Answer: Bear in mind that your one time exemption is worth the tax on $250k. I would wait until I could take advantage of the total exemption of $250 k instead of wasting the 80k you won’t get if you take your exemption on the $170k capital gains you’re going to get on your current home. At some point (if you keep flipping) you’re going to have a home that produces a profit (capital gain) of $250k or more and then you’re going to regret taking the exemption on only $170k back when you did.

Finance and Banking

In In re Reliant Energy Channelview, LP (No. 09-2074, 2010 U.S. App. LEXIS 956, 3d Cir., Jan. 15, 2010), the Third Circuit Court affirmed the District Court’s denial of a break-up fee to a stalking horse bidder, applying the reasoning of Calpine Corp. v. O’Brien Env’t. Energy, Inc.