leirs may have to pay tax on house

Michael

‘DOLLARS AND SENSE

TIS NOW’ the season for
questions about tax, RRSPs
and the rest. | try to choose
a- variety of topics with the,
widest . “interest; -unfortu-
nately, :
4 -, Ser questions individually. °
“+ “Pm ia “widew. with my own
home and some GiCs, P'm leaving
everything.to my children. .Will
- there be any. taxes? Pve lived in
my house 46 years.” — 1.D. :

*-There ‘are’ no inheritance or
death “taxes (at. least,. not at’ the
“moment).’ og

Any. accrued, unpaid GIC inter-'
“est: will normaiiy:.be deciared “on
your final income tax return. Even

" though. -your house is worth far ~

-more.than: when. you. bought. it,

ther ‘will be no tax on this “‘prof-

it’? “at your ‘death. because it has.
been your principal residence. :

‘However, if) the value: of, your”

:home’ Zoes:up, between the date of”
‘your death ‘and date of sale, your:
children ‘will ‘have ’to ' pay: taxon
5% of. this increase... :
of mea self- -empioyed .
‘businessman. I want to fin a way.

columns not le cash

Tm unable ‘to :an---

to claim the money Fim paying to
have my daughter tulored in’ her
high school math. Any. sugges-
tions?”? — B.B,

Pay your. daughter to work for
you; that’s a deductible expense.
Then your daughter can pay the
tutor herself.

“My husband, who is 10, cash-
ed a $10,000 regintered retirement
savings plan last: year to buy our
granddaughter a car for gradua-
fion. Now I'm rexding in your
an RRSP
i'm

unless absolutely necessary,

surprised the bank didn’t tell him

at the time to think it over. Could

he take out another RRSP by

March 1 to help soften the tax

‘blow?"' — A.M.

Yes as long as he qualifies to
make (1) a regular. contribution to
an RRSP because he had carned
income in 1991, or (2) a spousal

tollover because he had regular

pension income from a former
employer in 1992 and you will be
71 or younger this Dec, 31.

‘However, .if he was ia. the

lowest tax bracket in. 1992. and’.

expects to be ‘in-a higher tax
bracket’ shortly (perhaps he’ll. be
converting .his RRSP to an annui-
ty.or, RRIF, which will raise his

income), then he did‘ well to take :
out the money last year while he,

was still in the lower tax bracket.

“In 1980, we ‘adcpted our son -
- who had been abandoned by his -

mother, We new. are both in our
70s’ and he’s an A ‘student in
Grade 7. How can we iavest ‘‘'a

few bucks” for him for his tater...
years, without i income tax eating it:

up?” —C.R. ‘
As. there’s a. ‘good chance your

“son :will continue. to post-secon-. -

dary ° education,” you should’ be

putting the $1,500° maximum into «

a registered education savings plan

at the beginning of each year. You.
‘don’t, get a ‘deduction’ for’ your
‘contribution but the money in the.

: Plan will grow tax-free.

een a a bola =

‘Learn more ‘about the new «..
“contribution, rollover rules and
‘the’ advantages.
~ Hear Mutual:-Fund Experts’ recommendations |
“on how. to diversify your investment portfolio
to protect against interest rate fluctuations

“DATE: February and, 1993

ve TIME: 7:00 pm to 9:00 pm
» LOCATION: The Lonsdale Quay Hotel,.
“423 Carrie Cates Court; .. ;

“North vancouver 986- 6111

“cal any of the branches below. to reserve
“your seats today. Seating Is limited, -

on Lonsdale, N. Van

"gst. 5600

Westview Shopping Ctr., N. Van. 981-5665

Edgemont Village, N.Van -
“1, 48th & Marine Dr., W. Van °
“2040 Park Royal, West yan *

981-5650
926-3274
922-0158

If you have been saving his
family allowance cheques, put this
money plus the new monthly child
tax benefit cheques into an ace
count in his name, or in your
name(s) in trust for him. The in-
terest. (from term deposits and
Canada Savings Bonds) and divi-

dends (if you buy mutual funds

that invest in. ‘dividend-paying
stocks) will belong to him for tax
purposes.

He probably has little or no in-
come, so will pay no tax. Note: if
you invest your own money in his
name, then you — not he — must
report the interest and dividends,

However, if you feel comforta-
ble with the risk and give your son
money to invest in stocks or. stock
market mutual funds that produce
capital gains, these profits will be
his. He can claim his capital gains
exemption and pay no tax. You
could also make such investments
in your.name and use your own
exemption to avoid tax, |

“My trust company has raised

its inonthly charge for managing
my uccount of about $248,000 to
almost $300 a month from $188
six years ago. That seems a very
high charge .as the account . has
grown: only about 5% a ‘year.
Could. 1 do better’ on my own,
perhaps. by investing in’ mutual
funds?’ — V.W.

First, meet with a senior trust
company official to review your
account's performance. If you
aren't happy — and if you have
the time and = expertise» —
withdraw perhaps $50,000 to in-
vest on your own. See how your
investment growth compares with
the trust company's, {f you can
do a better job, then gradually
take over the rest of the money,

Mike Grenby isa North
Shore-based columnist’ and in-
dependent. financial adviser who
works with individuals; he. will

‘answer your questions as space
write to him'c/o The.

allows,
North Shore News, 1139 Lons-
dale, North Vancouver V7M 2H4,

"Some things | never change.

f For more information, please call

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