Question
You friend Fred needs your expert advice. At the end of 2021, Fred sold both his Toronto Townhouse and his Summer Cottage. Every year he
You friend Fred needs your expert advice. At the end of 2021, Fred sold both his Toronto Townhouse and his Summer Cottage. Every year he has spent time at the Lake side cottage with his family. The two properties are used exclusively for personal purposes. Relevant information for the two properties is as follows:
Toronto Town House | Summer Cottage | |
Year acquired | 2005 | 2005 |
Cost | $264,000 | $36,000 |
POD | 528,000 | 330,000 |
Real estate commission | 32,000 | 16,000 |
Required:
Assist Fred in minimizing his capital gain taxes by designating principal residences of the property. You will need to:
1. Calculate the tax implications of each property disposal assuming none are designated as principal residence
2. Recommend which property should be designated as principal residence
3. Assuming you can divide the designated years between the two properties , what would be your recommendation
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