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Ontario|Tax LawGeneral Rules 171 Capital gains and losses The law applies different tax rules to capital gains and losses. Generally, if you sell capital property, such as stocks on the stock market, for more than you paid, the amount of the difference is considered a capital gain. If you sell something for less than you paid, the amount of the loss is considered a capital loss. If you have a capital gain, only 50% of it will be taxed. If you have capital losses, only 50% of the loss can be subtracted from any capital gains you made in that year. Capital losses can be carried back or carried forward.
- Property exempt from tax
There are some types of property that are exempt from being taxed for capital gains. The most common capital gain exemption is the sale of your principle residence. A principle residence is the home where you ordinarily live or where your spouse, former spouse, or child ordinarily lives.
Other examples of income that are generally not considered a capital gain include proceeds from the sale of business inventory, land bought with the intention of making profit on its resale, and profit made on the sale of personal property that costs less than $1000. If you sell personal property for more than $1000, you will only have to claim a capital gain on the difference between the amount you received from the buyer and $1000.
You will need to determine your total capital gains and losses before filing your tax return. When you sell stocks or other investments through a broker, you will usually receive a receipt for tax return purposes that lists your capital gain or loss. For more information about capital gains and losses, you can consult a tax lawyer, accountant or a tax filing service.
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