Solved: How can I show a reserve on a capital disposition

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New Member

How can I show a reserve on a capital disposition

I bought a investment property in 2014 for $225,000, sold it 2016 for $280,000.   So as capital gains of $55,000.  Buyer gave me $45,000 (16.071% of the selling price) in 2016 and I provide the remainder ($235,000) back to him as a mortgage on the house.  I only received the $45,000 in 2016.  I understand I need to file a T2107 to claim a reserve (I understand a reserve to be an amount of tax to be paid in future years - I have the Premier 2016 and cannot find a T2017.

From a T2017 I found online I determined I can have a reserve of 80% of the capital gains because it is less than the capital gains x the amount payable to / the proceeds of the disposition.
 How can I proceed to complete this filing?
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Accepted Solutions
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New Member

How can I show a reserve on a capital disposition

Under the "Income" tab > "investments" then select "Capital Gains". Place a check mark in the top and bottom boxes and follow the prompts. A reserve can be set up to spread the Realized Capital Gain over five years.

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3 Replies
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New Member

How can I show a reserve on a capital disposition

would like to follow your situation and see the actual calculation to setup reserve and how to report subsequent capital gains in future years when proceed was paid in form of mortgage payment.
Highlighted
New Member

How can I show a reserve on a capital disposition

Under the "Income" tab > "investments" then select "Capital Gains". Place a check mark in the top and bottom boxes and follow the prompts. A reserve can be set up to spread the Realized Capital Gain over five years.

View solution in original post

Highlighted
New Member

How can I show a reserve on a capital disposition

You can set up a five year reserve for the unrealized (Mortgage Debt) Capital Gain in the sale of your property. Any cash paid will be declared in the year of sale and 1/5 of the reserve will be taken in to income in the year of sale. The remaining 4/5 of the deferred gain will be claimed in equal amounts over the next for tax years.

Calculate the total gain then use the correct Reserve Screen in Turbo Tax (see previous answer for access) to set up the 4/5 reserve amount. When using Turbo Tax in subsequent years make sure that the required amount is included in to income on Line 127 by reducing the amount of your reported reserve in each year.


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