- Best investment vehicle in Canada.
- No taxes paid on the gains or profit of the sale.
- Great tax deferral basis.
- Capital gains exemption that applies.

- So in today's video, we're gonna talk a little bit about selling your principal home or selling your investment property and what kind of taxes you're going to pay to the government on these dispositions. So, if you were selling your principle and let's just say, you've lived in your principal home for 10 years, you bought it for $500,000 and it is now a million dollars, and then you're selling it, well, guess what? In Canada, this is the best investment vehicle, there are no taxes paid on the gains, on the profit of the sale. So if you bought for 500 and sold for a million, all $500,000, go into your pocket, great investment, great tax deferral basis, okay. Now let's talk about an investment property. If you were holding onto an investment property, and let's just say again, you bought it for $500,000 and you are selling it for a million dollars, okay, there's $500,000 of profit, if you wanna say, in this property. Now, in dealing with an investment property, there is the capital gains exemption that applies, okay. So in Canada, what they do is they take your total purchase price, and which is determined as your costs, guessing your purchase price in this example is $500,000, let's add on land transfer tax, 'cause you're allowed to build that into your adjusted cost base, you get to put in your legal fees at the time of purchase and any capital costs, these are renovations, additions, improvements that you did to the property throughout the five or 10 years of ownership on this property. So, again, using this example, let's assume you purchase for 500, all of your renovations, land transfer legal fees, let's say was $100,000 for simplicity, so now your adjusted cost base is $600,000, okay. Your net proceeds, this is the amount you put into your pot, your net proceeds equals your selling price minus your adjusted cost base, okay? So, in this example, you've sold for a million dollars, your adjusted cost base is 600, so your net proceeds are $400,000. Now in Canada, like I said, you've got a 50% capital gains exemption. So assuming your net proceeds are $400,000, 50% of that is applied, okay, so now you're down to $200,000 and $200,000 will be the proceeds, will be what your taxes owed are based on, okay? So if you are in a marginal tax rate of say 30%, 30% of the $200,000 is $60,000 of tax that you owe the government. If you earn a 50% tax rate, you will own 50% of the 200,000, which is $100,000, okay, so that's still not that bad considering you've made $400,000 on this property and you're gonna pay taxes accordingly. Hope you got something out of this.