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Here’s how Canada’s capital gains tax increase will affect Albertans with vacation properties

A new capital gains tax increase, aimed at Canada’s highest earners, is causing frustration for some Albertans with secondary homes or cottages, according to a real estate broker.

Starting on June 25, the tax will increase from 50 per cent to 67 per cent for those making more than $250,000 in capital gains.

“It’s going to have an impact without a doubt,” said Jim Jardine, an associate broker with Trilliant Real Estate Group.

“We don’t have time to get it on the market and sold by the deadline that we’ve been given.”

Jardine specializes in selling recreation property and has already spoken with at least a dozen people who are trying to figure out if they should sell their second property or hold on to it.

The government said the change will affect the wealthiest 0.13 per cent – about 12 per cent of Canada’s corporations – and Canadians with an average income of $1.42 million.

How much is the tax?

Here is an example of how the tax increase will impact those selling a vacation home:

If a vacation home is purchased for $250,000 and later sold for $750,000, under current tax rules that would be a capital gain of $500,000. At 50 per cent, the taxable capital gain would be $250,000.

However, on and after June 25, 2024, that same cottage would be subject to a tax of 50 per cent for the first $250,000 of the capital gain and an additional tax of 66.7 per cent for every dollar above $250,000.

The taxable gain on that same cottage would rise from $250,000 to $291,750.

“May (is when) we get into the prime recreational selling time and I can tell you right now, I don’t have much for sale,” said Jardine. “There’s a lot of frustration as to what the implications are.”

Evelyn Jacks, the president of the Knowledge Bureau and author of 55 tax books, recommends people don’t rush into making a decision and speak with a tax specialist.

“This is a huge tax increase, and it’s going to impact a lot of people,” she said.

“I think what’s really important is that people get good sound advice and look at the numbers the numbers are going to tell the story.”

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