Finance and legal

Tax

Property tax

Local property taxes for the 5 vacation properties are included in the budget for the monthly maintenance fee.

 

Tax on usage/enjoyment

Because the vacation properties are held in a partnership structure, the personal and non-rental use of the properties are deemed not to result in any income inclusion to the owners for Canadian or US federal income tax purposes.

 

Tax on sale. Capital gains tax

While we do not think of the ownership shares in a 21-5 Limited Partnership as investments, an owners’ share in a 21-5 LP is an asset that can be sold or transferred.

Should an owner choose to sell his or her ownership share in a 21-5 LP, and the proceeds exceed the owner’s total costs at the time of the sale, the owner will realize a capital gain which will be taxable in Canada. As well, because a portion of the properties held by the 21-5 LP will be US properties, a portion of the capital gain will also be taxable in the US.

 

Bequeath or gift tax

Should an owner wish to bequeath his or her ownership share in a 21-5 LP to another person, for Canadian income tax purposes, the owner will generally be deemed to have disposed of the interest for proceeds of disposition equal to the full fair market value of the interest at the time of the owner’s passing. The Canadian capital gain will then follow based on the deemed proceeds of disposition. For US purposes, US gift tax may apply.

 

Estate tax

Because any estate tax implications relate only to the individual 21-5 owner and not the owner association itself, we always advice the owner/beneficiaries to consult with their own estate tax experts.

 

21-5 has the experience and knowledge to help our 21-5 owners/families regarding any tax questions related to their owner association, but we also recommend our potential and existing 21-5 owners to consult with their own lawyer and/or accounting resources in relation to their 21-5 ownership share.

 

 

Master bedroom in a 21-5 apartment on Mallorca, Spain

 

Contact 21-5 and we will help you fulfill your vacation home dreams.

 

email to info@21-5.com or call 604 446 1188