The most talked about personal finance measure to appear in a federal budget in recent years has to be the capital gains tax increase announced last month.
Half of a capital gain is currently taxed. Starting June 25, the 50 per cent inclusion rate will apply to the first $250,000 of a gain and then two-thirds of the remaining gain is taxed. As much as the federal government has tried to present this as a tax-the-wealthy measure, higher capital gains taxes can affect people who simply own a cottage in addition to their family home.
A lot of advice has been issued to help people decide whether to sell assets now to take advantage of a lower tax rate or hang on for the long term. Here’s a roundup of some of the best tools and guidance:
- A video overview from Preet Banerjee, who writes on personal finance for the Globe.
- More helpful perspective in this video from accounting giant Grant Thornton, including an example of the actual dollar impact; here’s some video advice specifically aimed at medical professionals.
- A should you sell or should you hold calculator
- A portfolio manager’s take: " Most of our clients are better not doing anything...”; more commentary from advisers about not rushing to sell.
- How to calculate a capital gain on a property.
- Thoughts on how the tax change specifically affects cottages; more on cottages, including ideas on how to minimize or avoid the higher capital gains tax.
- How the principal residence exemption can be used to reduce capital gains on vacation homes
- Why higher capital gains taxes make sense; how the tax change punishes prosperity.
We want to hear from you
Are you a Canadian Millennial or Gen Z who faced the difficult decision to sell your house because you could no longer afford it? The Stress Test podcast is looking at how high prices and interest rates are hurting young Canadian home owners, who often have the largest mortgages. Maybe you got divorced, lost your job or just struggled to keep up with large monthly payments? If you reluctantly sold your house, we want to hear from you. Email Stress Test co-host Roma Luciw to share your personal story.
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Rob’s personal finance reading list
The fine line between being frugal and a cheapskate
This article says frugality is a virtue, but I wonder if it’s sometimes used as a euphemism for cheapskate.
Ugh, my credit score is down
A credit counsellor looks at how credit scores work, and what might explain a drop in your score. I interviewed someone at the credit monitoring company Equifax recently and she said credit score is more than 760, you don’t have to worry about a thing when applying for credit.
Banking for small business
A review of Loop Financial, a challenger to big banks in providing accounts for small business. Loop offers multi-currency accounts with favourable conversion costs.
A food bank for pets
All about a Toronto program called Through Ruff Times that helps owners who can’t afford pet food. Here’s a look at how owning a dog or cat has become so expensive.
Ask Rob
Q: I read with interest your recent column on cottages and capital gains tax. I have been under the impression for many years now that when a husband and wife jointly own a home and a cottage, one can claim the home as their principal residence and the other claim the cottage as their principal residence, thereby avoiding capital gains tax on both when sold. Is this still the case, or has the law changed?
A: Here’s an answer to this question from Armando Minicucci, tax partner at Grant Thornton LLP: “For years before 1982, more than one housing unit per family can be designated as a principal residence. Therefore, a husband and wife can designate different principal residences for these years. From 1982 and forward, each family unit can only designate one property per year as their principal residence.”
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Tools and guides
A useful set of charts on housing affordability dating back to 1999.
In the social sphere
Social media: Introducing Canadian Bacon, a new Reddit personal finance community.
Watch: David Chilton – yes, the The Wealthy Barber guy – on the importance of joining the group RRSP plan at your workplace.
Money-Free Zone: I first heard the Black Keys about 20 years ago, around the time they released a piece of blues-rock amazingness called Rubber Factory. I sort of lost interest in the band over the years, but I am enjoying a song off their latest album called Read Em and Weep. My ultimate Keys song is Just Couldn’t Tie Me Down from Rubber Factory.
More PF from The Globe
- Seniors scramble to manage tax impact of higher GIC returns
- How to overcome ‘savings guilt’ when you’re living paycheque to paycheque
- What is the bitcoin halving event, and how did it affect the price?
More Rob Carrick and money coverage
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Rob Carrick