Based on Ontario tax laws 1) Capital Gain on the PropertiesMaggie bought a house in 2001 for $330,000. She fixed it up with paint and wallpaper but in 2003 shedid a major renovation which cost her $105,000.In the same year when she bought the house, she also bought a cottage for $160,000. She winterized itimmediately by spending $20,000. Maggie also spent other $32,000 on the cottage in 2005 on the newroof, new siding, new windows and new doors. The Fair Market Value of the cottage in December2021 is $550,000.Real Estate prices have increased by 6% over time on the house.She sold both the properties in December 2021 and paid commission of 4% to the Agent for this.Question:Calculate taxable capital gain on the sale of the House?Calculate taxable capital gain on the sale of the Cottage?Calculate tax liability in the year of sale on the House and the Cottage assuming she is in a 30%Marginal Tax Rate.

A tax is a compulsory charge paid to the government by everyone who is generating any kind of…

Question: Calculate taxable capital gain on the sale of the House? Calculate taxable capital gain on the sale of the Cottage? Calculate tax liability in the year of sale on the House and the Cottage assuming she is in a 30% Marginal Tax Rate.

Question: Calculate taxable capital gain on the sale of the House? Calculate taxable capital gain on the sale of the Cottage? Calculate tax liability in the year of sale on the House and the Cottage assuming she is in a 30% Marginal Tax Rate.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Based on Ontario tax laws

1) Capital Gain on the Properties
Maggie bought a house in 2001 for $330,000. She fixed it up with paint and wallpaper but in 2003 she
did a major renovation which cost her $105,000.
In the same year when she bought the house, she also bought a cottage for $160,000. She winterized it
immediately by spending $20,000. Maggie also spent other $32,000 on the cottage in 2005 on the new
roof, new siding, new windows and new doors. The Fair Market Value of the cottage in December
2021 is $550,000.
Real Estate prices have increased by 6% over time on the house.
She sold both the properties in December 2021 and paid commission of 4% to the Agent for this.
Question:
Calculate taxable capital gain on the sale of the House?
Calculate taxable capital gain on the sale of the Cottage?
Calculate tax liability in the year of sale on the House and the Cottage assuming she is in a 30%
Marginal Tax Rate.

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