LOWER YOUR TAXES BY REVIEWING YOUR INVESTMENT MIX. 

Most investment advisors have discussions with their clients about investment strategies. This typically includes a review of the risk tolerance of the investor. It should also include your goals and objectives and mirror your personal financial plan.

Once a portfolio is created, and the appropriate asset mix is determined, it's important to decide how these assets are owned.  If you have both non registered and registered plans (like an RRSP) you can lower your taxes signficantly by making the investments tax efficient.

Personal income tax is now lowest on capital gains and highest on ordinary income (such as interest).  Whenever possible own your interest bearing investments in your RRSP.  Hold property that produces capital gains outside your RRSP.

We can advise you if your investments are tax efficient. Send Keith an email at keithd@dsaccountants.com and he will contact you.  

TAX-FREE SALE OF YOUR HOME.

Owning a home produces some income tax benefits. The biggest benefit is the principal residence exemption. This allows a family to exclude the gain on the sale of a principal

residence - making it totally tax-free (a rare thing these days).

The exemption is claimed when the gain is realized which is typically when the home is sold.  If you have only one home the process is simple. There are no forms to file and no special procedures of any kind. You simply ignore the entire sale from an income tax perspective.

The process is more complicated when second properties are involved. The  Income Tax Act allows one principal residence exemption per family. If you have two properties (at any time-now or in the past) you must choose which property is your principal residence.  A form designating the property as your principal residence must be filed with your tax return.  Once the choice is made it is permanent. The sale of the other property is now subject to capital gains taxation (for the period of time it is not the principal residence) when it is sold.  

Some tax rules in the past allowed more than one principal residence exemption per family.  If you have owned your home for a long period, and owned more than one property during that period, it may pay to review your information carefully. A second principal residence exemption might be possible if the properties were owned in separate names.

For those who owned property prior to 1972, another set of rules apply. The capital gain created at that date is exempt regardless of the principal residence exemption.

YES! --I DO WRITE THIS NEWSLETTER

Keith Doxsee, C.A, CPA, CFP,  has written this Newsletter each and every month since its inception years ago. Each article is written with you -- the client -- in mind.

The Greater Toronto area is home to most of our clients. This allows Keith to bring a local perspective to the articles he writes.

The Newsletter is free to friends and clients of the firm. We are happy to send the Newsletter to any of your family, friends or business associates - just drop us a note or click on the forward email button at the end of the newsletter.

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