When selling your first home, whether it's a piece of property or you are packing up and looking for a change of scenery, it can be hard to remember all that paperwork during such a hectic time.

Many sellers even forget or completely misinterpret the taxing aspect of selling a home as it's universally understood that taxes are inevitable, especially when it comes to personal sales. One needn't worry about that.

But, despite this, as home prices continue to skyrocket, more and more home sellers' money is being pulled out of their own pockets to make that transition between homes and properties.

To prevent this, we've created an article to share with readers some ways to minimize how much of their sale profits are going to the government.

What is Capital Gain Tax?

CGT (Capital Gain Tax) is otherwise known as the tax you pay to the government once profit has been made; this is done by selling investment property for more than you originally bought it for.

Although you cannot avoid this tax when it comes to selling a piece of property, you may be able to evade being taxed if the land you are selling is your primary residence.

How to Calculate gains taxes on property sales

One way to calculate the sum of your possible capital gain loss is to subtract the adjusted base cost, which can be read as ABC, away from your selling price. Once this is complete, you then must divide the number by 50%.

That is the amount that will be taxed in accordance with your living situation, which province you are located in, and your income tax bracket.

Overall, this means that half of the profit that you do end up earning from selling an asset will be taxed while the other half is tax-free and yours to keep.

How can I reduce this tax?

Suppose your property is not exempt from the rath that is capital gains. In that case, there are still a few strategic moves home sellers might be able to pull off to minimize the amount needed to be paid or, in some cases, possibly eliminate paying altogether.

These strategies list as follows:

1. Hold your future investments in a tax-sheltered account

2. Donate your property to a cause that matters to you

3. Time the selling of your property to fall around when income tax is at its lowest

4. Use capital losses to zero out your capital gains

Factors the CRA considers in an audit:

During an audit, the CRA must consider a multitude of factors to determine whether or not the sale property is correctly reported. A few of these key factors include:

. The history of the seller and if they've sold any properties similar

. The type of property in which was sold

. The intentions of the seller when they originally bought the property

. Why it was decided the property should/needed to be sold

By understanding these few essential factors, clients will be able to define the nature of their sale and be prepared for a CRA investigation revolving around the selling of the home.

Contact your Accountants today, click on this link —> https://capexcpa.com/contact