Selling and Buying Back In
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Thread: Selling and Buying Back In

  1. #1
    Junior Member
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    Smile Selling and Buying Back In

    Hi, I own a Canadian dividend mutual fund outside a RRSP and I would like to lock in some gains by selling and then buying a t-bill fund. What are the tax implications for the 2017 tax year? I would also like to buy more of the dividend fund with new cash. Should I just hold my units instead and buy the t-bill fund directly with new cash? Thanks.


  2. #2
    Senior Member
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    Well, it depends if you want to pay tax or not. If you sell, you lock in the gains and you have to then pay tax on those gains. If you just keep it, and put your new money into the t-bill fund, then you won't have to pay taxes now (except for on the dividends, of course).

    If this is a low-income year for you, it might be a good idea to lock in the gains and pay tax on them while you're in a lower tax bracket. But if not, it's probably better to defer the taxes for a later year.

  3. #3
    Senior Member
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    Quote Originally Posted by RGC8 View Post
    Hi, I own a Canadian dividend mutual fund outside a RRSP and I would like to lock in some gains by selling and then buying a t-bill fund. What are the tax implications for the 2017 tax year?
    While held in the RRSP, there are no tax implications .... if on the other hand, you plan to withdraw the full $$$ from RRSP, the $$$ withdrawn are reported as income.

    Longer term, selling for a gain increases the value of the RRSP so that there are more $$$ that will need to be withdrawn in the future. Most have lower income in retirement so it works out well.


    Quote Originally Posted by RGC8 View Post
    ... Should I just hold my units instead and buy the t-bill fund directly with new cash?
    Depends ... if you are going to re-buy, are there any costs?
    How likely do you think there would be a significant drop in the MF prices?


    Quote Originally Posted by Spudd View Post
    Well, it depends if you want to pay tax or not. If you sell, you lock in the gains and you have to then pay tax on those gains ...
    If the OP sells then *withdraws from the RRSP* ... then yes. I doubt a withdrawal is in the plan as the OP talks about using new cash to re-buy, presumably in the RRSP.
    The OP needs to confirm whether the proceeds are staying in the RRSP, in which case there's no tax implications.


    Cheers

  4. #4
    Senior Member
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    Quote Originally Posted by Eclectic12 View Post
    The OP needs to confirm whether the proceeds are staying in the RRSP, in which case there's no tax implications.
    He said "outside a RRSP", not inside.

  5. #5
    Senior Member
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    Apparently I had too much egg nog or celebrated too long ....

    Post # 2 covers it nicely then ... I would add though that most of the gain should be capital gains so it is one of the better taxes to be paying (i.e. cheapest or second cheapest).

    Then too, where one is sure there will be a cheaper buying opportunity (how many are right?) ... selling could work nicely.

    Also ... if the OP has some capital losses from previous years or can sell by Dec 24th in 2017, the losses will reduce or eliminate the CG to pay taxes on.


    Cheers


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