4& — Wednesday, July 8, 1992 -— North Shore News Wrong move on property could cost thousands DO YOU own property other than your principal residence — typically an investment or vacation property? One of the best guidelines I’ve seen — and you can get a free copy — could help you save thousands of tax dollars. Last February’s budget prapos- ed a change in claiming the capital gains excmption on property prof- its (excluding yous principal resi- dence of property used in a business). If it’s a good investment move, you might want to sell the proper- ty now to maximize your use of the capital gains exemption. In other cases, you might want to keep the property in the family: You can still trigger the capital gain by transferring the place to a family member or company you own, But the wrong move could cost you thousands of tax doliurs, warns Peat Marwick Thorne (PMT), (You can get a free copy of the firm’s eight-page newsletter from a local office — check the phone book’s white pages — or by writ- ing to Capital Gains/Real Estate Newsletter, KPMG Peat Marwick Thorne, Suite 1200, One Toronto St., Toronto, Ontario MSC 2V5; Attn. Michael Hearty.) The new rules Pro-rate the amount of capital gains exemption you may claim if you owned the property before last March. (If you bought property since then, a BUSINESS R2OMS THE NAME might imply that this boutique only sells clothes for those who are the financial movers and shakers on Wall Street. But while - Walt Street Fashions, 1718 Marine Dr., West Vancouver, does sell to the Wall Street crowd, or in Vancouver’s case the Howe Street crowd, it also offers designer clothes to anyone else at discount prices. The store has been operating since February and is run by partners. Diane Bebbington and Lestey Barre. “All of our clothes are made in Vancouver and we cater to people who like quality clothes fcr less cost,”’ says Bebbington. The most expensive items in the store are jackets for $135. Bebbington adds that business has been booming since the store _ first opened its doors. ‘“We’ve found a niche here in West Van-— couver,’’ she said. Wall Street Fashions will also FREE BOOKLET One often hears Canadians com- plaining about the high amount of tax they pay. What many individo- _als do not realize is that simply by Structuring their investments carc- fully, they can pay far less tax, This guide will provide you with ideas for saving tax through your investment program. Call today to receive your com- plimentary booktei. Mark Osachoff 661-7433 ScotiaMcLeod Irnted ereument are’ sr 192! chartered accountants. - WOOGa CHUGGA WwOOGA CHYGGA WOogA CHUGG, wOOG Michael DOLLARS AND SENSE future profit wili not qualify for any of the exemption.) The formula is this: (a) number of months you cwned the proper- ty through February 1992, divided by (b) total number of months you owned the property, times (c) the profit. That’s the amcunt that qualifies for the capital gains ex- emption (assuming you haven't used it up). BUSINESS BF close its store and serve refresh- ments for groups of about six cus- tomers who want to take their time and receive personalized -ser- ice. Most of the store’s customers come from the North Shore. QUAY MARKET MOVES “THE LGNSDALE Quay Market has added four new stores to its operations and has announced changes to the operations of some * existing businesses. The new QO Cafe & Lounge on the third level waterside is open for breakfast, lunch and dinner as well as between-meal snacks and drinks. J. Gregory Men’s Apparel, located on the second floor, has a large selection of sportswear for the weekend and dress clothing for the office. Boardroom rules are left behind with Mickey Mouse silk ties and barn-yard- appliqued cotton shirts. * Also new on the second floor A = ? scene s ectacular a a8 MOU trave to the quaint 446 The new rules pro-rate the amount of capital gains exemption you may claim if you owned the property before last March.99 Because of the formula, if the value of property you owned be- fore last March stays the same o7 drops, it will cost you more in tax the longer you wait to sell or otherwise tock in your gain. On the other hand, if the value in- creases at a rate at least equal to the rate of increase prior to March, there should be no tax penalty for keeping the property assuming the rules don’t change again. Example One. Husband (H), who is in the 50% tax bracket, and Wife (W) have their full capi- tal gains exemptions availabie. H owns a cottage, bought in September 1987, for $100,000. In August 1992, the place is worth $200,000. H transfers the cottage to W as a gift at its fair market value — $200,000. (He has to tell Revenue Canada he doesn’t want the automatic spousal rollover to ap- ply. That rollover sets the transfer value at his original cost — Surj Rattan BUSINESS BRIEFS west side is Fatal Attractions, which sells popular lines of lingerie and sleepwear as well as . fashion accessories and hosiery. A third new store on the second level of the market is Fifth Street Fine Gifts, which offers a variety of unusual and unique gifts and $100,000.) In August 1996, the coztage ‘is still worth $200,000 when W sells it to a third party for cash. Under the new rules, H can claim $90,000 of his profit as an exempt capital gain. He then pays $3,750 tax for this year on the remaining $7,500 taxable capital gain (the taxable capital gain is 75%. of the full capital gain). When W sells the property for $200,900, she has a cost base of $200,000. There is no profit and so no tax. Example Two. We have the same H, W and original $100,600 cottage. But now the place is worth only $120,000 whea H gives it to W at the fair market. value this August. When W sells the place in 1996 it’s worth $200,000. H pays only $750 tax on the gain. When W sells, the taxable capital gain is attributed back to H. Now — and this is a key point — because the property changed hands after last February, no cap- tableware for all occasions. Customers will find. both classic and contemporary looks and af- fordable prices. Other changes at the market in- clude Out of Africa Global Culture moving to the north side of the second floor; La Tortifleria moving to the International Food - Court and Daily Scoop Ice Cream and Dairy relocating from the food court to the south end of the market floor. Also, just in time for summer, the Harrington Farm Fruit stail is open for business again at the food court. The outlet currently features cherries. Look for peaches in mid-summer and ap- ples in the fall. MARKETING SEMINAR NORTH VANCOUVER actress, ° counsellor and the director of the Film Actor’s Studio, Sheicra Fit- zgerald, will present international business and marketing consultant -_ . . ’ Syke 4 op | Fedoacnonng esnediat 2, cj There’s nothing like a rollicking ride on the grand old steam a train, the Royal @ | Hudson. The along I e Howe Sound coastline logging town of ' Ave., ital gains exemption is availiable. And so H pays tax of $36,000. Total tax: $30,750. p if H hadn't given the cottage to W, he wouid have been able to claim his exemption for just over j half the capital gain when he sold § the place in 1996. And his tax bill would have been ‘‘only’’ $20,625 § -— instead of $30,750. Other traps abound. Let’s say you sell the property to an adult 9 child for less than its fair market jj value. Your capital gain will still be calculated on the fair market value but the buyer’s gain will be based on the amount actually paid — resulting in double taxation... PMT provides examples’ and guidelines to help you decide whether to ‘‘crystailize’ your cap- ital gain to get the most- benefi it fron: your exemption. “ For example, you need io wor out hew much of your’ capital gains exemption is available. Yo must also look at costs involved in giving or transferring property, and at possible tax costs of ii creasing your net income now.’ - Mike Grenby is a. North Shore-based columnist - and ’- in dependent financial .adviser:.who works with individuals; he: will answer your questions as. space allows: — write to him c/o’ The North Skore News, 1139 Lonsdale North .Vancouver.’: V7: 244, a oe Sandy Levey at a business seminar called The Art of ‘Personel: May. keting. Levey has over.15 years’ experi-~ ence in success consulting and has: assisted many people in realizing their personal’ and - professional goals and dreams. Her clients include professional: from all walks of life. aswell: as major corporations such as Swed-- ish Aislines. : Levey teaches people: . * @ how. to design a. caree! business that is personally. aratty ing; @ how to create a network: oO supporters; - a @ how to present yoursel of Tens - @ increase the value of your ser. vices without working foneer. and harder hours; about money, success ss and power. : For more information,: call CHUGGA WOoca; CHUGG, woOGA CHuccA WO0G, CHUGGA WooGA CHUGGA WOOGA CHUGGA Wook CHUGG, wooGA C) CHuGGh WO0Ga fo OG. 3° Squamish, And Bunker C. Bear, our lofible n mascot, _ sometimes drops by with treats for the’ kids “Alli in - all, it’s a blast from the past.@9 °~ and ada forget. through North you'll never “ " ~ rain departs at. It Brings Out The Kid In 1 All Of Us. 10:00 A.M., Wednesday Cali BC Rail 631-3500 or Ticketmaster 280-444, h Sunday, from the , ‘ancouver station.