Year-End Tax Planning Tips for Real Estate Investors

1. Tax-Gain Selling. As of June 25, 2024, the capital gains inclusion rate for individuals was increased to 66.67%, from 50%, on capital gains exceeding $250,000 in a calendar year. If you are considering liquidating part of your real estate portfolio, it may be advantageous to stagger the sales over multiple calendar years to take advantage of the lower inclusion rate.

2. Tax-Loss Selling. If you have non-registered assets that are currently valued at a loss, consider selling them before the end of the year to crystallize a capital loss. Capital losses can offset capital gains in the current tax year, in any of the prior three years, or be carried forward indefinitely. Keep in mind, if you repurchase the same asset within 30 days, your loss could be deemed “superficial” by the CRA and nullified.

3. RRSP Contributions. You have until March 3, 2025 to make RRSP contributions that qualify for the 2024 tax year. If your taxable income is higher this year than in a future year, RRSPs make an excellent tool for tax deferral and minimization.

4. FHSA Contributions. Unlike RRSPs, the tax-free First Home Savings Account requires contributions prior to December 31 st to qualify for the current tax year. If you’re not already a homeowner, consider opening an FHSA before the end of the year to get a tax break AND a head start on your first down payment.

5. Defer Home Buyer Plan Repayment. Historically, Home Buyer Plan repayment must begin two calendar years after the year of withdrawal. Thanks to a temporary measure in the 2024 Federal Budget, homeowners who made a Home Buyer Plan withdrawal, between January 1, 2022 and December 31, 2025, have an option to defer repayment for five calendar years instead.

-Thomas Johnson, CFP®, B.Comm.(Hons.)-
Cascade Financial Group Inc.

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Planning Around The New Capital Gains Inclusion Rate