I've been divorced 6 years now and the only income I've had has been a salary which I pay myself from my small corporation. I have a commercial property in my personal name which has sat empty for years and I'm thinking about selling it. Does anyone have any experience as to whether a one-time capital gain from selling a commercial property affects CS calculations? Thanks.
One time capital gain?
- Thread starter A_Lawton
- Start date
Stillbreathing
New member
Yes it absolutely does. My ex is living off investments and has flipped a few properties during our separation. The capital gains he made each time are considered income when imputing income to him for cs and ss purposes.
I have received contradictory information on this; one lawyer said yes, included, the other said no, not if it was a one time occurrence, especially if the
asset had been included in equalization.
I would have thought at least the difference in valuation between equalization and sale would have been included, but it sounds like a grey area.
Another point to consider might be if the asset was generating income that was included in child support calculations, prior to the sale. If so, I would think there was a greater likelihood of inclusion?
asset had been included in equalization.
I would have thought at least the difference in valuation between equalization and sale would have been included, but it sounds like a grey area.
Another point to consider might be if the asset was generating income that was included in child support calculations, prior to the sale. If so, I would think there was a greater likelihood of inclusion?
I did some reading and came to the conclusion that there'd be a 50/50 chance of it affecting my CS and income proportionality. I asked my lawyer her opinion and at the end of it I said, "So it seems like 50/50 odds?" and she agreed. Maybe I'll just sit on the property for a few more years...rent it out maybe enough to cover expenses and make just a little profit. Thankfully I have just one kid, so even if I do happen to sell it and my CS increases (she would have to take me to court...I would not volunteer, seeing as CS policy with regard to capital gain is not set in stone), it's not like it will crush me.
Now my question is, if I sell it and the capital gain affects my CS, would it increase my CS payments permanently or could I have my CS lowered back to normal after a year?
It would affect them that year. You could argue it was a one time increase but it depends on the judge hearing the matter.
The rental income is considered for cs calculations as well. You have to decide if its worth it to keep it or better to sell.
Can you move into it for six months and then sell?
The rental income is considered for cs calculations as well. You have to decide if its worth it to keep it or better to sell.
Can you move into it for six months and then sell?
Desperate_Dad
Member
I'm actually shocked a lawyer actually figured out the right answer. The right answer is definitely no - it is not income for chold support purposes.
If you owned this property when you separated, it is included in equalization therefore it is not applicable.
You also inquired about the appreciated value either since separation or after separation.
This is also not applicable. Think of it this way. Many ex's purchase homes which have significantly increased in value since separation. However, if you sell a principal residence that you live in, the capital gain s tax free so it doesn't appear on a tax return. If any of your ex's sold their house, would you go after half of the appreciated value? Of course you wouldn't.
So just because a property is taxable, it shouldn't be treated any differently.
Now the problem you have is that many incompetent lawyers and judges just blindly go by Line 150 income without analyzing the individual lines and it gets erroneously included as income.
The money you earn after separation is irrelevant. It would be like saying your ex gets half of your pension after you've separated which is completely ridiculous. This same issue also happens with RRSP cashouts which are also not income for child/spousal support.
Recommended course of action:
Before selling the property, go to court and get an advance opinion that the capital gain would not be included in income. None of these lawyers and judges can be trusted to do the right thing so get something in writing.
Accountant
If you owned this property when you separated, it is included in equalization therefore it is not applicable.
You also inquired about the appreciated value either since separation or after separation.
This is also not applicable. Think of it this way. Many ex's purchase homes which have significantly increased in value since separation. However, if you sell a principal residence that you live in, the capital gain s tax free so it doesn't appear on a tax return. If any of your ex's sold their house, would you go after half of the appreciated value? Of course you wouldn't.
So just because a property is taxable, it shouldn't be treated any differently.
Now the problem you have is that many incompetent lawyers and judges just blindly go by Line 150 income without analyzing the individual lines and it gets erroneously included as income.
The money you earn after separation is irrelevant. It would be like saying your ex gets half of your pension after you've separated which is completely ridiculous. This same issue also happens with RRSP cashouts which are also not income for child/spousal support.
Recommended course of action:
Before selling the property, go to court and get an advance opinion that the capital gain would not be included in income. None of these lawyers and judges can be trusted to do the right thing so get something in writing.
Accountant
backinthesaddle
New member
Moving into a rental property doesn't negate capital gains. I own several rental properties. I moved into one. One must pay capital gains on the increased value up until the time you move into it and then it becomes your residential home according to CRA. Should I move out and rent again the capital gains tax must be owed on the increased value from the time I move out until I sell. The Government always gets their money.