Path: utzoo!mnetor!philmtl!keghamr From: keghamr@philmtl.philips.ca (Kegham Redjebian) Newsgroups: can.general Subject: Re: The Taxman Cometh for NSERC Award Recipients Message-ID: <706@philmtl.philips.ca> Date: 14 Sep 89 14:09:07 GMT References: <1989Sep8.084613.10300@lsuc.on.ca> Reply-To: keghamr@philmtl.philips.ca Distribution: can Organization: Philips Electronics Ltd. - St. Laurent P.Q., Canada Lines: 26 Organization:./ In article <1989Sep8.084613.10300@lsuc.on.ca> dave@lsuc.on.ca (David Sherman) writes: > >Wrong. First, the principal residence exemption has no dollar limit. >Second, if you rent part of the building, you may lose the principal >residence exemption in part. Third, the general capital gains exemption >is indeed $100,000, but that's combined with all other capital gains. >Fourth, you can lose access to the exemption if you deduct >certain passive losses including interest expense (such as the >mortgage interest on your rental property.) >David Sherman Assuming that you've exhausted your $ 100,000 limit, you're better off applying all eligible deductions to reduce your income, where the deductions are applied at a 100% and later pay taxes on 66% of your capital gains, the only way you could lose in this scenario is if the capital gains catapult you in a higher tax bracket than at which you applied operating expense deductions. ex. property bought at 100,000, depreciate it down to $ 0.0 (over many years) if your tax bracket was 50% you recovered $50,000. later on you sell for what you paid 100,000 , now revcan recognizes a cap-gain of 100,000 since it was depreciated to 0.0 but the taxes paid on 100,000 x 66% = 66,000 x 50 % = 33,000. you wind up with a net gain of 17,000.