tag:blogger.com,1999:blog-4402283548766807872.post4854146143402181802..comments2024-03-14T19:35:14.456-04:00Comments on The Blunt Bean Counter: Cottages - Cost Base Additions, are they a new CRA Audit Target?The Blunt Bean Counterhttp://www.blogger.com/profile/11358868550072516313noreply@blogger.comBlogger197125tag:blogger.com,1999:blog-4402283548766807872.post-20555220003521454462023-03-06T22:48:41.942-05:002023-03-06T22:48:41.942-05:00I don't follow the question. What year did the...I don't follow the question. What year did the real estate agent say the cottage was worth $400-450k?The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-65860407504963953712023-03-01T15:02:04.007-05:002023-03-01T15:02:04.007-05:00Hello. My husband and sister were gifted the famil...Hello. My husband and sister were gifted the family cottage by their mother in 1994. It was here principal residence. We sold the cottage in 2022. The only appraisal for the cottage that can be found was in 1989 for market value of $301,000 but the real estate agent said she would put the cottage for sale at $400,000 to $450,000. Which appraisal would be considered fair market value? The appraisal in 1994 has gone missing. Thank you. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-8176303791320921642021-08-22T12:31:46.151-04:002021-08-22T12:31:46.151-04:00Hi Anon
1. I would argue the correct ACB is the t...Hi Anon<br /><br />1. I would argue the correct ACB is the total of the cost of the land and the cottage<br />2. There is some additional risk, but it is still somewhat a function of whether your return is selected for audit and using the "correct acb" would not necessarily trigger the audit in itself. <br />3. If the auditor was totally unsympathetic and you did not object, you are correct - typically an auditor or their manager would allow some cost for the cottage on a practical basisThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-52844339314110838752021-08-19T15:16:04.664-04:002021-08-19T15:16:04.664-04:00Hi BBC,
1. In the case where land is purchased fo...Hi BBC, <br />1. In the case where land is purchased for $50K and then a cottage built with no receipts kept, is the ACB properly $50K? <br />2. Is it then correct that if an ACB of $100K was actually reported upon disposition, this would be an audit risk? <br />3. And if the auditor was unsympathetic and required receipts, is the capital gains then recalculated and taxes back-charged? <br />Thanks so much!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-21107355868697616222020-10-05T18:49:02.111-04:002020-10-05T18:49:02.111-04:00Hi Anon
I would always use a lawyer, especially o...Hi Anon<br /><br />I would always use a lawyer, especially on leased land as it can be complicated. I only know of the concept of leased land, I have never had to work on a file with leased land, so I cannot provide an answer, sorry.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-81402461685468137272020-10-03T11:00:53.083-04:002020-10-03T11:00:53.083-04:00I am purchasing a cottage on leased land. What do...I am purchasing a cottage on leased land. What documentation do I require form the seller and do I have to have a lawyer involved. Do I pay taxes on just the cottage?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-16867841915541875962020-06-16T21:17:57.256-04:002020-06-16T21:17:57.256-04:00Hi Anon
Sorry but your questions are not simple a...Hi Anon<br /><br />Sorry but your questions are not simple answers and I don't provide detailed tax planning on this blog. You should speak to your accountant or engage one for the discussion and planning above.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-73195645487490465672020-06-16T07:45:48.511-04:002020-06-16T07:45:48.511-04:00If a cottage is held in one spouse's name but ...If a cottage is held in one spouse's name but was purchased from a joint account and all renovations and expenses have come from the joint account, utilities eg hydro and propane are billed in the name of one spouse (hydro) and the name of the other spouse (propane) upon disposition can both spouses claim the capital gains equally?<br /><br />Also, is there a way to elect to crystallize the capital gains now and spread them over 5 years without a disposition of the property?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-43649920252652564812019-10-15T20:40:22.371-04:002019-10-15T20:40:22.371-04:00sorry no, it was only issued in 1994 for one year....sorry no, it was only issued in 1994 for one year. The form cannot be used anyways, it was to only be used in 1994 and if not filed, is not valid if filed later.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-62487590239402219122019-10-07T12:32:50.732-04:002019-10-07T12:32:50.732-04:00Do you happen to have a copy of a blank T664 form?...Do you happen to have a copy of a blank T664 form? I've been looking everywhere for one but it is like a unicorn... talked about but non-existant.Saintly_toohttps://www.blogger.com/profile/13710589408577748955noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-77124917529953384692019-04-28T08:04:02.528-04:002019-04-28T08:04:02.528-04:00each was allowedeach was allowedThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-68064407449621295022019-04-22T21:05:37.429-04:002019-04-22T21:05:37.429-04:00Thanks again. I have a copy of an old tax return t...Thanks again. I have a copy of an old tax return that contains an "ACB Summary" that appears as though I filed for the bump-up. My wife's tax return also contains the same summary. Was each spouse allowed to elect the bump up? Or just 1 bump-up per household?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-91549388804968669432019-04-19T22:50:40.430-04:002019-04-19T22:50:40.430-04:00Hi Anon
1. The bumped ACB applies to the cottage ...Hi Anon<br /><br />1. The bumped ACB applies to the cottage even if it is not your PR.<br />2. The entire cost is included<br />3. The costs to get ready are a bit blurry and thus I will not comment.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-67788202816430662642019-04-19T21:20:47.487-04:002019-04-19T21:20:47.487-04:00Thank you for such great information and for conti...Thank you for such great information and for continuing to answer questions on this complicated topic. We sold our cottage recently and had a few questions:<br />1) We filed a T664 in 1994 to bump up the ACB. We don't plan to designate the cottage as our principal residence. Can we still take advantage of the bumped up ACB if we don't plan to designate the cottage as our principal residence for any of the years that we owned it?<br />2) Can we add costs to get the cottage ready for sale to the ACB (example: costs required as a result of home inspection)<br />3) We have the receipts for capital improvements, but do we include the entire cost (incl tax) as an addition to the ACB, or just the cost before taxes<br /><br />Thanks againAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-69850348630124425492019-04-07T08:29:45.183-04:002019-04-07T08:29:45.183-04:00Hi Sandra
You cannot make the 1994 election now, ...Hi Sandra<br /><br />You cannot make the 1994 election now, you are out of luck<br /><br />This article discusses ACB additions - I would probably consult an accountant to help if you need more help than the article https://www.bdo.ca/en-ca/insights/tax/tax-articles/tax-planning-strategies-cottage-owners/The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-81278822476479903862019-04-04T15:21:34.511-04:002019-04-04T15:21:34.511-04:00Hi My husband built out cottage in 1992 on land p...Hi My husband built out cottage in 1992 on land purchases in 1988. I dont think we filed to increase the ACB by 100000 in 1994. If we didn't, can we still file it and be reassessed? How do you calculate the adjust cost base for a house you built yourself? The cottage was livable within a year but we continued to work on it as time and money permitted. Is there a limit to how long receipts can be considered towards the actual build of a residence?Sandrahttps://www.blogger.com/profile/00277941261274029201noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-28862200771695754692019-01-29T17:07:21.227-05:002019-01-29T17:07:21.227-05:00Hi April
Sorry this is a somewhat complex situati...Hi April<br /><br />Sorry this is a somewhat complex situation, you need to speak to an accountant, you have many issues to consider here and you need someone to understand all the facts to help you to make the best decision for tax purposes and deal with the tax issues you may have created.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-37452024896504225152019-01-29T08:31:16.852-05:002019-01-29T08:31:16.852-05:00Hi there,
My father gifted me a piece of property ...Hi there,<br />My father gifted me a piece of property in 2001 which was valued at $17,000. He proceeded to build a camp on the property and HE lived there for the next 17 years. I have no receipts for the camp he built or the driveway that was put in, etc. It is valued at $127,000 in 2018 when I sold it back to him for $40,000. Again, my value was $17K for property and it is valued at $127K now with the camp on it. I am unsure how to proceed and what I need to claim the capital gain. Any advice is appreciated.April Hhttps://www.blogger.com/profile/02595784642539247078noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-76023783670689996372018-12-15T12:10:40.396-05:002018-12-15T12:10:40.396-05:00Hi Vinnie:
You can’t deduct or capitalize the imp...Hi Vinnie:<br /><br />You can’t deduct or capitalize the imputed cost of your own labour for an improvement, but you can capitalize the cost of the materials you used for your improvements. Your tools would likely be considered personal costs by the CRA but the generator is a bit grey so I cannot provide a definitive yes or no. The road is an interesting question and I don't know the answer off the top of my head. But my initial feeling is the CRA would not consider that a cost of your cottage property, but again, I have not researched the issue and you probably want your accountant to look into the issue in detail for you.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-88661883369338010162018-12-12T17:37:24.197-05:002018-12-12T17:37:24.197-05:00I built my own cottage on Lake of the Woods. You ...I built my own cottage on Lake of the Woods. You need tools to do that. No electricity. So a gas generator and electrical tools that run from it. 1. Tools count for my ACB? Had to hire some professionals to take down trees to clear an area on which to build the cottage. 2. Their costs count for my ACB? Me and my cottage neighbours --now about sixty of us -- paid to create a gravel road from the mainland to our cottages, so we could use our cottages in the winter. Cost was about $7K each. 3. The $7K counts for the ACB? Would appreciate your guesses here. I know these are somewhat arcane questions<br /><br /> Vinniehttps://www.blogger.com/profile/08657339755946151354noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-56889552626332000022018-09-05T22:24:37.960-04:002018-09-05T22:24:37.960-04:00The last time I tried which was a few years ago, t...The last time I tried which was a few years ago, the CRA could not provide a copy of the election.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-69084119713256248592018-09-05T12:58:58.317-04:002018-09-05T12:58:58.317-04:00Thank you for all the helpful information. Do you...Thank you for all the helpful information. Do you have any recent information regarding how CRA handles 1994 elections? My Uncle just sold his cottage but cannot remember whether he filed an election in 1994 to increase the cost base. Thanks againAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-19961484394886509472018-03-30T17:03:55.397-04:002018-03-30T17:03:55.397-04:00Hi Anon
The election was required in 1994 to bump...Hi Anon<br /><br />The election was required in 1994 to bump up your cost and IMHO you are out of luck. See what your accountant says.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-60399353101376805592018-03-29T19:59:55.830-04:002018-03-29T19:59:55.830-04:00I had a detailed appraisal done in 1994 (which I s...I had a detailed appraisal done in 1994 (which I still have) to establish a new ACB for my property but I did not file a T664 form. The property was sold in 2017. Is it too late to use the 1994 ACB value in filing 2017’s income tax return to reduce capital gains.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-57876833274186292092017-11-02T00:38:38.262-04:002017-11-02T00:38:38.262-04:00Hi Anon
First of all I am not sure you have a dee...Hi Anon<br /><br />First of all I am not sure you have a deemed disposition on the title change to a spouse, speak to your accountant. I have not seen anything from the CRA on transportation costs in respect of a cottage, so I cannot provide you guidance. The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.com