In calculating the capital gain on the property, Canada Revenue Agency allows only the following to be added to the purchase price to determine the adjusted cost base:
Legal fees and disbursements in conjunction with the purchase Furnishings and renovations included in the selling price;(receipts for the included items will be required). It is critical that you retain receipts for the furnishings and that they identify the furnishings and as having been acquired for the Whistler property as well as any Customs documentation showing furnishings acquired in other jurisdictions have been brought to the Whistler property. Goods and Services Tax (GST) which is 5% A portion of the interest on mortgage payments (only if the Vendor has properly elected to have the interest capitalized on their tax return). Canada Customs&Revenue Agency does not allow any deductions from the selling price in determining the gain (i.e. you cannot subtract the real estate commission, legal fees or GST paid on the selling commission). The amount required to be remitted on the gain is typically 15 to 20% of the gain. By filing a Canadian tax return subsequent to the sale, you can claim expenses such as commission and legal fees and some of the tax paid may be recovered. Sellers should contact their accountants or lawyers with respect to requesting a Clearance Certificate ( only if you are a non-resident) as soon as an accepted offer has been received with respect to the property. Should the completion date be prior to the issuance of the Clearance Certificate, a holdback of between 25% and 50% of the sale price will be required by the Buyer’s lawyer before the Clearance Certificate is issued.
Please note that the Buyer’s lawyer may take the position that if the property has been rented out it is a depreciable property and therefore the holdback is 50% on the portion of that purchase price that relates to the building.
