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Capital gains on marital cottage sale - Options?

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  • Capital gains on marital cottage sale - Options?

    Our marital cottage (joint tenancy) was sold last Dec. Net proceeds have been held in trust by real estate lawyer as no SA had been finalized. As I noted in another post, recently had mediation/arbitration where it was "agreed" that I would pay a lump sum out of my half of cottage proceeds to offset any SS.

    I am now concerned about the capital gains implications of my scenario. If, hypothetically - I don't know the full figures yet;
    - there was a net proceed of $200k and capital gains of $100k total so we would each be "on the hook" for 50k of gains
    -lump sum is approx 90k so I would net 10k
    -capital gains tax on my $50k could likely be more than $10k so I would end up with less than $0...If I am correct in my assumptions?? I know you only pay tax on 50% of capital gain and at your tax rate

    We also have to sell the mat home so I was wondering if I proposed waiving all rights to the cottage proceeds and ask for an adjustment in the splitting of the mat home proceeds? Would that aleviate me from capital gains on the cottage? Or am I screwed there?

    Any advice?
    Thanks!

  • #2
    Whatever you do there will be tax owing to CRA. Which you want to split with your ex.

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    • #3
      I am not suggesting trying to sneak this past her - sorry if it came off that way. Her tax rate would be less than half mine thus if she took all the proceeds wouldn't CRA get less? Or is it immaterial since I was on title and thus would need to pay capital gains tax on half regardless?

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      • #4
        You probably cannot choose in whose hands the capital gain is taxed. Check with CRA on that.

        Check here about how costs of major reno/repairs can be used to increase your ACB ( adjusted cost Base) and hence can reduce your tax owing. The Blunt Bean Counter: Cottages - Cost Base Additions, are they a new CRA Audit Target?

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