Money I sold some art. What should I do with the money? Do I have to pay tax?

18:00  13 june  2018
18:00  13 june  2018 Source:   moneysense.ca

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I promise there’s a whole informative post waiting here for you — and a more in-depth answer to the question, “ do I have to pay taxes ?” While you may not actually need to pay taxes , you should be prepared to report your income.

Most of us are aware that if you sell some of your investments at a gain, you will have to pay taxes on that amount. This should help lessen the blow of your tax bill. Another option is to put aside the money that you will owe in taxes on dividends, interest and capital gains aside as you earn them.

Q. I have recently sold some paintings from my parents’ art collection. The money is more than I expected. I will be retiring in the next year or two. I have an RRSP and TFSA. I can put the max in those, but am not sure if that is the right thing to do. Also, I will be sharing the money with my already retired brother who is collecting money from QPP and will be starting OAS soon.

My current income is $39,000 gross per year. My assets are about $100,000. I have no real estate, no debt, and no dependents. Is this capital gains and how do I minimize the tax I will pay and not jeopardize my brother’s income?

Thank you, Roy M.

A. Hi Roy. Thanks for the question. As per the Canada Revenue Agency, when an item(s) is used for personal use by the owner/someone related to the owner it is termed “personal use property.” From your description, the art you sold falls into this category. When this property is sold, or when the owner of the personal use property passes, a capital gain or loss can arise.

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I sold some art . What should I do with the money ? Do I have to pay tax ? How to calculate your capital gain on the sale of art . by Andrew Fox Jun 10, 2018. Q. I have recently sold some paintings from my parents’ art collection.

I 'm 18 and about to go to college. Luckily, I don't have to worry about student loans or most other living expenses. I 've been working and have over ,000

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When determining the amount of the gain or loss, if the cost of the property was below $1,000 it is pushed to $1,000. Additionally, if the amount received from the sale is less than $1,000, the amount considered to have been received is pushed to $1,000. This essentially means that no capital gain will arise when the personal use property is sold for less than or equal to $1,000. Since a painting fits into the sub-category of “listed personal property” if it is sold at a loss, the loss can only be offset against capital gains that arose from the sale of other listed personal property but it can be carried back for three years or forward for seven years.

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What should I do ? Fri 26 May 2006 01.15 BST. The pay is quite good, and will earn you extra cash relatively quickly, without being too mentally taxing . Another big money maker is buying and selling flats but this may take up more time than the amount you are willing to use.

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Note that you do not add the capital gain itself to your income, rather, you add the taxable capital gain which is equal to 50% of the capital gain.

Example: Let’s say the painting was purchased for $5,000 and your cost was $2,000, your capital gain would be $3,000 but your taxable capital gain would only be $1,500; this $1,500 taxable capital gain would be added to your taxable income and taxed at your marginal rate.

To address your question, there is not a way to shelter a capital gain you may have incurred from tax since the gain was not incurred in a TFSA. Additionally, if you were the owner of the painting, then you will have to pay the tax on any taxable capital gain involved, not your brother so it will not affect the taxes he will need to pay.

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However, if you received this art from your parents’ estate, and if a taxable capital gain has arisen previously this could mean you may not have a taxable capital gain or the taxable capital gain may be minimal, for example:

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HMRC wants me to pay tax in advance - but my business income plummeted and I fear I 've overpaid. Need help managing your money ? If you have been trading for some time or have sold any valuable items but have not disclosed the fact to HMRC, you should get your affairs in order urgently.

Or should I not wait several years to invest the money in the 403(b), and immediately put it into something like a Vanguard fund? Read also: My friend gave me some good stock tips — now he wants me to pay him.

For instance, let’s say your parents paid $2,000 for the painting and when they passed it was worth $5,000. Similar to the example above, the taxable capital gain would be $1,500 which may have been paid in their estate taxes. If this taxable capital gain has been accounted for your new adjusted cost base would be $5,000 meaning if you sold the painting for $5,000 there would be no capital gain incurred.

If you are looking to save the proceeds to use later in retirement then I would suggest putting the money into a TFSA to shelter the growth on that money from taxes.

Andrew Fox is a certified financial planner with Fox Wealth Mangement in Calgary.

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