# Sold rental condo, where to put proceedings?



## empire9 (Oct 18, 2016)

Hey guys, im new here.

I recently sold a rental condo that i owned for 5 yrs, was not my primary residence.

Given capital gains taxes that would normally incur - would it make sense if I put the proceedings into a TFSA Savings account in order deflect capital gains taxes?


thanks


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## Just a Guy (Mar 27, 2012)

You triggered the capital gains as soon as you sold. You'll need to pay them this tax year. The only way to defer the capital gains is not to sell the property.


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## mark0f0 (Oct 1, 2016)

Yeah it would seem prudent to consider 20%-25% of whatever gain you had, net of expenses (and make sure you kept good track of your expenses), depreciation, etc., to be a liability to the CRA. And keep it in a cash account, or even just send it in with a note that you are remitting the capital gains owed (so they can do the appropriate things on their end so they don't just immediately mail you a cheque for your overpayment!).

The CRA currently pays 3% on overpaid remittances, so if you can get them to keep the money before it is officially a liability (ie: May 1, 2017), that is actually a better return than you would receive at most banks for a cash savings account. 

http://news.gc.ca/web/article-en.do?nid=1126999

The best use for a TFSA is for long-term investments, particularly those that throw off a lot of otherwise taxable income. Not as a short-term cash 'savings' account (despite its name!).


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## Nerd Investor (Nov 3, 2015)

mark0f0 said:


> Yeah it would seem prudent to consider 20%-25% of whatever gain you had, net of expenses (and make sure you kept good track of your expenses), depreciation, etc., to be a liability to the CRA. And keep it in a cash account, or even just send it in with a note that you are remitting the capital gains owed (so they can do the appropriate things on their end so they don't just immediately mail you a cheque for your overpayment!).
> 
> The CRA currently pays 3% on overpaid remittances, so if you can get them to keep the money before it is officially a liability (ie: May 1, 2017), that is actually a better return than you would receive at most banks for a cash savings account.
> 
> ...


I may be wrong, but I think that 3% rate only applies on amounts the CRA owes you which only technically occurs once the taxes are filed (basically makes sure you're compensated if they drag their but on sending your refund). 
Otherwise, I think there would be some savvy people sending in huge installments for no reason and using them as a savings account


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## mark0f0 (Oct 1, 2016)

Nerd Investor said:


> I may be wrong, but I think that 3% rate only applies on amounts the CRA owes you which only technically occurs once the taxes are filed (basically makes sure you're compensated if they drag their but on sending your refund).
> Otherwise, I think there would be some savvy people sending in huge installments for no reason and using them as a savings account


There actually was a problem with businesses doing exactly that a few years ago, which is why they changed the rules (and you'll see rates that apply specifically to business/corporate customers). But individuals are still eligible for the 3% rate on prepayments. That is, if you can convince them to actually keep your money, and not just automatically return it to you.


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## james4beach (Nov 15, 2012)

The capital gains are crystallized.

The only thing you have to worry about now is what to do with the money going forward. This entirely depends on your time horizon -- when might you need to tap into that money again? Do you have any other big purchases on the horizon, or is this money not necessary until retirement?

e.g. If you have a 20+ year horizon, then invest in the stock market.


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