# Calculating capital gains tax on sale of second home in Ontario

I have a few questions on capital gains tax on a 2nd property in Ontario, Canada.

1) Is capital gains calculated based on Sale price - Current Mortgage, or Sale price - purchase price? Im assuming the latter for my next question.

2) If I sold house today for \$550k, and purchased it at 250k, what would be my profit ? Please correct me.

my calculation is as follows:

550 - 260 = 290k , Initial gain

290k * .5 = 145k , 145 is taxable

145k * ~.37.70 (not sure on this tax rate) = \$54,665 K is taxed from my sale price of 550k,

Leaving me with 550k - \$54,665 - Mortgage remaining as my profit ?

Any help or correction would be appreciated, thanks

• In general, gains are profit realized, so you're on the right track. You may be able to add some costsof ukeep/repairs to the mix, decreasing the profit; check the rules for what is and isn't allowed where you ste, and what records are necessary to justify that. Jan 12, 2017 at 16:54
• Did you take any depreciation on it in the years that you owned it? Jan 12, 2017 at 21:02
• @zeta-band , No, don't think so, it is my parents so i'm not 100% sure. Jan 13, 2017 at 21:24
• Good if they didn't. Canada has depreciation recapture rules like the US does and that can complicated the taxes. In general, the taxable income will be sale price - purchase price. Your realization will be the sale price - what you still owe on the mortgage. (Realization is the cash you get out of it.) Jan 13, 2017 at 21:59
• You say in a comment "it is my parents". Do you mean (a) it is theirs (and they are selling it); (b) it was theirs, and you bought it off them (some time ago); (c) it was theirs and you've inherited it? For (a) or (b) it should be the sale prices less the purchase price (that they or you paid). For (c) -- if it's similar to the UK -- CGT will be the sale price less the "market value" at time of inheritance. Jul 11, 2017 at 7:14