@ business BS - Sunday, April 24, 1983 - North Shore News How much profit should go to the taxman? If you sell property and make a profit, there are a number of factors that determine how much of that profit will go to the taxman. How the profit will be taxed depends on whether the sale has been a capital gain or income to you. Since half of your capital gains are tax- free, it's to your advantage to have the sale treated as a capital gain. If you have held onto the property for some time, it is more likely to be treated asa capital gain. If you simply buy a property and turn it over quickly, chances are your gain will be treated as income and you will pay more tax. For example, if you bought a condominium ata ski nll just as they were clearing the land and sold it before it was complete to buy a larger one and do the same thing, your profits will be treated as income and not as Capital gains. If you had bought the original condominium, held it for several years, and maybe rented it out when you weren't using it, you might have your _ profit treated as a capital gain. If your property is treated as a capital gain, you can use the reasonable reserve rules to defer paying taxes on the capital gain. Non-residents of Canada cannot use a reasonable reserve. A reasonable _ reserve means you do not have to pay tax on the money you've eamed until you actually receive the cash. For example, you might be required to finance part of all of the sale as part of the sales agreement. In that event, the taxable portion of the sale may not be available to you and you will not be taxed on it until you get the money. The maximum period that you can spread the capital gain over is five years. You must include at least 20% of the gain in income this year. Mortgages on the property may affect your reasonable reserve calculation and you may need professional assistance to make the calculation. If your property sale is a capital gain and you pur- chased it before December 31, 1971, which is called V Day, any capital gain ac- cured to that date is tax-free. For example, if you bought an office building for $25,000 in 1961 and it was worth $55,000 in 1971 and $225,000 when you sold it, the capital gdin between 1961 and 1971 is tax-free and you will be taxed on one half of a capital gain of $200,000. Recapture of depreciation must also be included in your tax caluculation. If you own a piece of property with a building on it, you may claim depreciation on the building. After the building is sold, presumably at a profit, all the depreciation you've been claiming over the years will be treated as taxable income. This is called recapture of depreciation. Depreciation is also often called capital cost allowance. Recapture of depreciation can be deferred if the original cost of the building was less than $50,000 and you own other buildings in the same capital cost allowance class. When you sell or buy property, you should take care to detail how much of the purchase price is allocated to the land and how much to the building. It can make a big difference. Usually the purchaser wants the building portion higher so his depreciation is greater. The seller wants to value the lai& higher to reduce the amount of recaptured depreciation he must pay taxes on. Timing is also important. If an individual is selling capital property, his or her NEWS photo Eric Eggertson WITH THE MOUNTAINS in the background this truck fs unloaded at the three tlered Lambton steel building in the industrial district south of Main Street in North Van. Harry Martin CASE Co-ordinator Counselling Assistance to Small Enterprises HELPING SMALL BUSINESSES HELP THEMSELVES This Government sponsored assistance programme ts available to any small business Counselling is done by retired successful businessmen Areas where CASE may help Start up Bookkeeping Exporting Advertising Marketing Cost Controls Inventory Control Personnel Cash Flow FOR FURTHER INFORMATION CONTACT Harry Martin, 145 W. 15th St North Van. Telephone 980-6571 ® Federal Business Development Bank “Your Buccese ise our Onty Business Banque tédbrale de developpement Canada | Prerequisites: None. Description: This course is designed. . 4 4for those students who have had NO “previous chemistry and who wish to go On in science: No labs-are given.” : Date: April 25 - Time: June 2° 6:30 - 10:00 pm Days: Monday; Wednesday, Thursday Instructor: Dr. P. LeCouteur Lacation: Capilano College, room NC 102 For information on registration call 986-1911, local 213. year-end is December 31 of legal, financial and _ real each year. A sale early in estate fields whose advice is January rather than late valuable. December will allow you to defer taxes nearly one year. When buying or selling business or investment properties make sure you structure your affairs to ensure the best profit potential. There are many professionals available in the Credit Dr. BrianL. Craver, D.C. CHIROPRACTOR is pleased to announce the opening of his practice at 159 East 15th Street NORTH VANCOUVER Phone 986-4900 X-ray Service Available IN THE WEST KOOTENAY The Theatre department of David Thompson University Centre in Nelson is holding auditions and interviews for students interested in entering the program in September, 1983 in Vancouver. April 29 and 30 10 a.m. -5p.m. The Waterfront Theatre (Granville Island) Or in Nelson at DTUC by Arrangement Until May 6 Arrange for an interview today by calling or writing Jim Hoffman, coordinator Theatre department, DTUC 820 10th St. Nelson, B.C. VIL 3C7. Telephone (604)352- 2241. The Theatre department at David Thompson Univeristy Centre in Nelson offers a full-time professionally onented two year diploma program in performance and technical theatre David Thompson University Centre is an educational facility operated by Selkirk College and the University of Victoria QUUANUANUANUUATUANU NN] Tecmo Gb RVIE bo Fi REAL ESTATE TRAINING How successful you are or Can be a8 a feal esate sales person depends greatly on the Company that is behind you Ensure your success by workung fora Company (at offers the essential backup secvices is Nationwide and tat will give you the personalized attonton and traning you need REAL ESTATE ere say tou. CONSIDER A.E. 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