Ottawa Divorce .com Forums


User CP

New posts

Advertising

  Ottawa Divorce .com Forums > Main Category > Financial Issues

Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

Closed Thread
 
LinkBack Thread Tools
  #1 (permalink)  
Old 07-30-2012, 09:54 AM
Member
 
Join Date: Jul 2012
Posts: 93
randomjohndoe is on a distinguished road
Default Capital gains, and other question

If I sell a house for a profit, will the capital gain be counted as my income for CS purpose? If it does, it is kind of unlogical. I spend 100K of my income (from which I already paid CS) on a house, the extra 100K sale price will be counted second time as my income?

Another question, one of the things I consider is to modify the house to make a rental flat in the basement. I'm going to have to spend about 10K to make it happen. As far as CRA is concerned, the 10K is my capital cost, which I can expense over certain number of years to offset the rental income. (Or any other income, for that matter). Question: how will it be looked at from family law point of view? Will they want to 'tax' my entire rental income and not allow any deductions? Granted I give her NoA and tax return that will have the deductions accounted for, but will she have legal ground to fight that in court?

I know for fact that family law does not always allow deductions that are legal under tax law. For example, meals and entertainment. The judge can ignore those and count all M&E expenses as an income. That is why I'm asking. I know tax system quite well, but family law is another matter.
  #2 (permalink)  
Old 07-30-2012, 10:26 AM
Senior Member
 
Join Date: Jul 2012
Posts: 1,678
OrleansLawyer is a jewel in the roughOrleansLawyer is a jewel in the roughOrleansLawyer is a jewel in the rough
Default

Your ITR and NOA are usually the start and end point of income discussions.

With respect to the home, if you live in it then - as a primary residence - there would be no capital gain in the transaction. If you are living elsewhere, then why would you expect the home to be treated any differently than other investments?

In any event, for non-recurring amounts of income the amount of child support is not necessarily increased to the guideline amount of the new income level.
  #3 (permalink)  
Old 07-30-2012, 10:43 AM
Member
 
Join Date: Jul 2012
Posts: 93
randomjohndoe is on a distinguished road
Default

Thanks, yes, I'm talking about primary residence.
  #4 (permalink)  
Old 07-30-2012, 11:13 AM
Senior Member
 
Join Date: Jul 2012
Posts: 1,678
OrleansLawyer is a jewel in the roughOrleansLawyer is a jewel in the roughOrleansLawyer is a jewel in the rough
Default

There are no capital gains on the sale of a primary residence.

If you do it routinely as a source of income then CRA becomes interested; a tax lawyer would be able to help you with that.

Regarding rental income, it is - as the name suggests - income, and consequently would increase your child support obligations.
  #5 (permalink)  
Old 07-30-2012, 11:16 AM
Member
 
Join Date: Jul 2012
Posts: 93
randomjohndoe is on a distinguished road
Default

Quote:
Originally Posted by OrleansLawyer View Post
Regarding rental income, it is - as the name suggests - income, and consequently would increase your child support obligations.
I have no doubts, the question was about CCA - would they be allowed under family law. Again, under tax law it is completely legit.

I understood your answer about NoA and ITR, I'm just clarifying here
  #6 (permalink)  
Old 07-30-2012, 11:32 AM
Senior Member
 
Join Date: Jul 2012
Posts: 1,678
OrleansLawyer is a jewel in the roughOrleansLawyer is a jewel in the roughOrleansLawyer is a jewel in the rough
Default

If you aren't hiding income from the CRA, it is rare that the family courts would impute an income other than what is on your NOA.

The (unhelpful) answer for your specifics is that it would depend on the amounts involved and other income sources. This being said, your NOA and ITR are the safest numbers to rely on.
  #7 (permalink)  
Old 07-30-2012, 11:41 AM
Member
 
Join Date: Jul 2012
Posts: 93
randomjohndoe is on a distinguished road
Default

Got it, thanks a lot!
  #8 (permalink)  
Old 07-30-2012, 11:52 AM
arabian's Avatar
Senior Member
 
Join Date: Jan 2011
Location: Western Canada
Posts: 9,854
arabian will become famous soon enough
Default

If you have income from a rental property or, in your case, basement suite, I would set up an accounting ledge and record your rental income as well as your expenses. You would treat it as a small business and at tax time report it in the same manner. Net income (after expenses) would be added to your own income. Accountant can give you further information. I would advise you to make an appointment with accountant before you do anything. Accountants still give the 1 hr free consultations (unlike most lawyers nowadays).
  #9 (permalink)  
Old 07-30-2012, 12:27 PM
Senior Member
 
Join Date: May 2009
Posts: 2,470
dinkyface will become famous soon enough
Default

Completely aside from family law issues, consider carefully what impact claiming CCA now will have when you sell the property. It may be that the short term benefit is not worth a large cap gain tax bill when you sell.
  #10 (permalink)  
Old 07-30-2012, 01:02 PM
Member
 
Join Date: Jul 2012
Posts: 93
randomjohndoe is on a distinguished road
Default

Quote:
Originally Posted by dinkyface View Post
Completely aside from family law issues, consider carefully what impact claiming CCA now will have when you sell the property. It may be that the short term benefit is not worth a large cap gain tax bill when you sell.
Thanks. Yes, I'm aware of that. In fact I think it would be beneficial if I do it now. All signs are that market is currently at the pinnacle and chances are when I do decide to sell the house I will have a capital loss on hands (relative to the moment I do the change of use), or at least not much of gain to speak of.
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On



All times are GMT -4. The time now is 06:57 PM.