When do you owe tax on an investment property?

Must you pay capital gains tax on a rental property every year?

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Q: Does an investor pay tax each year on the appreciation of equity in an investment property? If so, would I owe tax on the equity I have in a property? Would that increase as I pay down the mortgage debt?

— When are taxes owed, Guelph, Ont. 


Ayana Forward is a certified financial planner in Ottawa:  

Capital gains taxes are only due when there is a disposition of property (deemed or real). You do not pay tax each year on the appreciation of equity in an investment property.

RE Expert - Ayana ForwardAyana Forward is a real estate investor who also holds the Certified Financial Planner (CFP®) designation. Ayana is fee-based Financial Planner with Ryan Lamontagne Inc in Ottawa, ON.

 

 

Read more: Can you avoid capital gains tax? »
Read more: How to pay less capital gains tax » 
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