Anne Smith acquired her house in 20x0 for $150,000 and her cottage in 20x4 for $100,000. Due to a rise in real estate prices, she has decided to sell both properties and backpack around the world for two years. Both properties were sold in October of 20x8. Anne received proceeds of $375,000 for the house, and $250,000 for the cottage.
Required:
Calculate the minimum taxable capital gain that Anne will report for her house and her cottage on her 20x8 tax return. Show all calculations, identifying the taxable capital gain for each property.

Question

Quizplus · Accepted Answer

The Answer is

The capital gain on the cottage should be eliminated first as it will receive a higher exemption per year ($30,000) than the house ($25,000).

Anne Smith Acquired Her House in 20x0 for $150,000 and Her