Capital Gain | TaxConnections

14 May 2018

Canada Tax: Disposition Of Real Estate For Business Income Vs. Corporation Capital

A disposition of property can be categorized as business income or as a capital gain or loss. There are various factors to consider in determining if the disposition is business income or capital for a corporation.

As capital gains are only 50% taxable in Canada, it is generally more favorable for the taxpayer. However, capital losses are only deductible against capital gains. The capital losses can be carried back 3 years and carried forward against future capital gains. Therefore, your tax advantage may vary depending on the situation. Read More

Written by Grant Gilmour | Posted in Canada • International • Real Estate

18 Jan 2017

Rental Property Sales – A Simplified Look

When one has rental real estate, the sale of that property can have significant tax ramifications. Some of these are good, while others can create significant tax liabilities.

First, the good news. If there were losses that could not be deducted due to the passive activity rules, these losses may be deducted on Schedule E in the year of sale, assuming the property is sold in a taxable transaction.

Written by John Stancil | Posted in Real Estate

05 Sep 2014

German Church Tax Causes Controversy

There is currently a controversy in Germany in regard to the application of capital gains to the “church” tax that is levied on individuals who profess membership in certain churches in Germany.

The Bill of Rights was added to the United States Constitution in order to provide greater constitutional protection to certain individual liberties. These liberties include freedom of religion, a free press, the right to peaceful assembly, the right to bear arms, protection against unreasonable search and seizure, the right to avoid self-incrimination (taking the fifth), due process, protection against double jeopardy, the right to a jury trial, the right to counsel, and protection against cruel and unusual punishment. We have seen how some of these rights have been eroded over the years through changing attitudes, judicial Read More

Written by John Stancil | Posted in Capital Gains • Europe, Middle East • Income Tax • Tax Controversy

23 Dec 2013

Sales of Business Assets

Business assets are not capital assets but the sale my result in long-term capital gain if the asset has been held for more than one year. Under Code Section 1231, the net gain from sale of all Section 1231 assets is long-term capital gain, but there are two are two exceptions for depreciable property. (1) For personal property, under Section 1245, gain is ordinary income to the extent of any depreciation allowed or allowable (depreciation recapture). Allowable means that if the taxpayer could have taken depreciation on the asset but did not do so, then this amount must reduce the basis of the asset and is considered as ordinary income when the property is sold for a gain. (2) Under Section 1250, real property depreciated under an accelerated method is also treated as ordinary income. The amount of recapture depends on when the asset was placed in service and what depreciation method Read More

Written by Harold Goedde | Posted in Property Tax • Sales/Use Tax • Tax Provision/Tax Reporting

07 Sep 2013

REITs – A South African perspective as an OTC investment option

Real Estate Investment Trusts or REITs is a well known internationally known appropriate business structure yet South Africa only adopted its tax law as of April 1st, 2013 and its stock exchange listed or publicly listed trading rules to accommodate REIT’s as of May 1st, 2013.

Since then many property groups not only converted to a listed REIT but also restructured their balance sheets to remove the debt linked to a unit or a share. Now, on September 6th, the first American Depositry Receipt (ADR) status was granted to a South African listed REIT. One ADR unit equals 10 REIT units on the Johannesburg Stock Exchange. Despite the ZA Rand being at a 3 week high, the more recent currency exchange is circa R10=1U$D.

Real Estate Investment Trusts (REIT)

REIT’s are tax transparent or tax through flow investment vehicles that invest in and derive their income from real estate properties and mortgage, without necessarily paying tax on their trade result. To qualify for the South African REIT dispensation, a the REIT (either a company or a trust) must be tax resident in South Africa and be listed as an REIT in terms of the JSE (Johannesburg Stock Exchange) listing requirements.

REIT profits are distributed as tax deductible expenses (effectively pre-tax income) which is then received and taxed in the investors’ hands as taxable dividend income. As of 1 January 2014 the SA dividend withholding tax at 15% or the treaty governed rate where the investor is resident in a treaty country, will apply to nonresident investors. Read More