How Act Services Helped A Client Reduce Capital Gains Tax

At ACT Services, we are experienced accountants in Arnprior, Pembroke, Toronto, and Ottawa, ON. We specialize in accounting, and tax planning solutions, which help businesses, corporations, and individuals move forward with their finances.

We also like to offer business advisory strategies to help clients get out of a bind. Our personalized offerings save clients thousands and thousands of dollars in various accounting processes. Please keep reading to learn how we helped a client reduce capital gains tax.

The Challenge: The client wanted to sell raw land
A corporate client owned a raw land lot for years and wanted to sell it. However, selling the property in its current state would attract a hefty capital gain tax of 26.76%. So our client contacted us for assistance.

The Solution: Convert raw land into a developed lot
We told the client that he could qualify for the lower tax rate of 12.5% via small business deduction. To achieve this objective, he would have to obtain site and building plan approval, build an access road, and clear the site. It would enable him to convert the land into ready-to-build status. (basically change the status to active business). It didn’t take him long to accept our advice.

The Bottom Line
Getting the site and building plan approval took about six months. It cost $30,000 to clear the area and a further $35,000 to build an access road. However, it enhanced the fair market value (FMV) by at least $200,000.

The client sold the property for a profit of $430,000. The tax paid was only $53,750, with an after-tax profit of $376,250. The whole project took about eight months to complete, and the client was ecstatic with the outcome.

If you face a similar issue, contact ACT Services today. As the best accountants in Braeside, Pembroke, Toronto, and Ottawa, ON, we have over twenty-five years of experience.

Our services include accounting, tax planning, management consulting, business advisory, financial statements, bookkeeping, personal tax, and payroll services.

Get in touch with us today!
To learn more about how we can help you, please click here. Or, to read what our clients are saying about us, please click here. Get in touch with us by clicking here or call us at our headquarters at (613) 738-7712, or email us at support@actservice.ca.