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Just wondering if anyone has had to pay Capital Gains on a camp they've sold that is on a Land Use Permit? My lawyer seems to feel that since we don't own the land there is no capital gains to be paid. The camp has appreciated significantly in value so we will incur a profit. I can't see the Ontario government allowing an untaxed profit on anything. LOL.
If your lawyer is experienced in tax law,he's likely correct.
Why does it need to be owned to be considered a Capital Gain? It is an investment in real estate that went up, make sure the lawyer knows tax law.
First lesson. Don’t get financial advice from a lawyer. Get it from an accountant. Get legal advice from a lawyer. Get investment advice from financial advisor. Pretty simple.
It just may be regular income. Not a capital gain. In this case it you would pay more taxes on the income. Or, it may not be income at all. Im one of these three and I’m not an accountant. My best legal advice for you.
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Likely You are right on the "money".............so to say Goosesniper.Quote:
Originally Posted by Goosesniper
There is "no free lunch"here when taxation is considered.
Why would you pay capital gains on a property you don’t own ? Without a land use permit, it’s pretty much worthless, unless you can move the cabin..... I would think anyway.
My thoughts exactly !Quote:
Originally Posted by rick_iles
You can't sell something you do not own.
As others have said get the right advice from the right profession. In this case it is likely better if it is a capital gain as you can deduct some losses and/or expenses and then only pay tax on 50 percent of the "gain". If it is not a capital gain then the full amount of the gain would likely be taxable.
I sold a piece of property a few years back and never did anything at tax time to file a capital gain. I have yet to be notified I owe any taxes. I took my lawyers advice, took my money from the sale and kept my mouth shut. He did tell me I may get notification but it's been about 7-8 years and so far nothing
You'll love the interest and penalties when they finally do find out.Quote:
Originally Posted by canadaman30
A lawyer who advised you to potentially commit tax evasion. Great lawyer. Sounds like Saul. Thread carefully.Quote:
Originally Posted by rf2
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8 years so far...lol. Why would I pay tax when I have not been notified to do so?.. And btw my taxes were audited 4 years ago to boot.Quote:
Originally Posted by rf2
It is an investment in real estate that created a net gain.Quote:
Originally Posted by rick_iles
I hear what you are saying but if someone invests in a building complex but they are not the owners of said complex I am pretty sure their income on the investment is a capital gain.
Great responses, guys! I agree with every comment. I told the lawyer to talk to the accountant before he does anything. There's another wrinkle in this question. There are 5 owners on the LUP. One of them has passed away. He left no instructions as too what to do with his share because he assumed his name would just be removed and his share would simply pass onto the four remaining owners.
I suggested his estate should pay the capital gains on his share of the camp. The lawyer's suggestion is in my OP. I asked what happens when the final owner passes away? The final owners estate gets nabbed for the complete capital gains on the camp??? Geez that sounds expensive and unfair.
I loved the lawyers quote to me, "There's no room for logic in the law!". LOL.
LUP is not ownership.
Capital gains apply to "Real Property" only.
If you do not pay property taxes on the camp, then you cannot be taxed on the sale of what amounts to a shelter, which at the whim of government , could no longer be yours to use.
The one guy passed away with no instructions, oh fun.Quote:
Originally Posted by DanO
I had a friend who dealt with this, his family camp was simply moved around on hand shakes between parties, the last owner passed away and there were a lot of lawyers involved sorting it out, even though nobody was arguing thank god.
This would be my opinion as well....if you don’t own it, how can you be forced to pay CG tax???Quote:
Originally Posted by Bluebulldog
This sounds like the Tax law of Crystallizing an asset. It isn’t. But is similar.Quote:
Originally Posted by Fox
Whereby a gain is Crystallized and then a new ACB gets assigned and the process starts again.
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Paying property tax has no bearing on gains or losses.Quote:
Originally Posted by Bluebulldog
Capital gains are realized on a number of factors. Paying property tax on them is not a consideration.
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Insofar as what is being asked. I used paying property tax by example only.Quote:
Originally Posted by Goosesniper
A LUP with a camp on same, is not an appreciable asset. It is not valued by MPAC, nor does it have a relevant valuation that a capital gain ( or loss) could be verified against.
Unless I'm completely mistaken, in order to qualify for assessment for capital gains, the land must be owned, by the individual or other party ( Not the Crown). Which is why capital gains still apply for cottages etc on leased land.
My inqueries verify your post,BBD because I may be faced with the exact same scenario if our moose camp closes. Because it's on a LUP,we only pay rent to the landlord (government). No one person "owns" the building,therefore,when we close,everyone just goes their own way,no fuss,no muss,no "capital gains". You can't be charged on property you don't own,but, each one of us is equally responsible for property rehab (clean up).Quote:
Originally Posted by Bluebulldog
What about if you sell the camp and the LUP and in so doing you make a profit? MPAC has assessed the value of the property.Quote:
Originally Posted by trimmer21
Can you sell a camp on a LUP? I think I've seen them for sale on here.
No,an LUP cannot be owned,so it,in and of itself,can't be sold. It may only be transferred and in most cases,are cancelled by the government. AFAIK,there's no longer any renewals,either. Only portable camps are allowed and must be dismantled after use. If the LUP has a building on it,ownership of that may be shared among members as well as costs of operation and upkeep. Putting a dollar value on it as a whole is virtually impossible except for perceived shares of each member which would be agreed to. When someone drops out or dies,for simplicity sake,other members just take it over which still would never set up a capital gain. That's what I've discovered over the weekend. In our case,we have a solid bunch of guys that are willing to just close it down and share the cost of dismantling.Quote:
Originally Posted by DanO
When we bought our deer camp the LUP got transferred to us. We used to pay rent as well as municipal taxes. A few years ago when McGuinty was selling the furniture to pay the rent he offered the lease holders to buy out the LUP’s. We jumped on it. But we definitely paid taxes when we didn’t own it.Quote:
Originally Posted by Goosesniper
interesting topic as my girls have no interest in the camp but will inherit it some day and likely want to sell thier shares.
Not sure how this is relevant to my post that you quoted.Quote:
Originally Posted by terrym
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