lesson 6: the tax environment Flashcards
income taxes
taxes on money made on rents received from tenants
capital gains tax
taxes on gains for selling a property
goodbye tax
tax paid once the seller sells the house
welcome tax
tax paid when the buyer buys a property
when were the major tax reforms made?
December 31, 1987
what were the tax rules before the reforms?
Class 3 Capital Cost Allowance (CCA) rate 5%
Declining balance method
Full-Year Rule if Half Year does not apply
Capital Gains 75% to 66.67%
No put-in-use
what are the tax rules after the reforms?
Class 3 Capital Cost Allowance (CCA) rate 4%
Declining balance method
Half Year rule
Capital Gains 50%
Put-in-use in effect
Capital Cost Allowance (CCA)
a depreciation method under Canadian tax law
allows for the accelerated write-off of property under various classifications
how did the reforms affect the Capital Cost Allowance (CCA) rules?
The Capital Cost Allowance (CCA) rate applicable to buildings in Class 3 were reduced from the current 5% to 4% on a declining balance basis
Put-In-Use rule?
Put-in-use means that all costs are capitalized to year 0 when the building is constructed and ready to be occupied
The full-Year Rule (FYR)
applies when 100% of the CCA rate is taken in year 1
The half-Year Rule (FYR)
applies when 50% of the CCA rate is taken in year 1
The Beginning Undepreciated Capital Cost (BUCC)
the amount prior to CCA being taken
The Ending Undepreciated Capital Cost (EUCC)
the amount after CCA is taken
