My wife and I are on OAS and CPP as well as GSI. I expect to have a large capital gains income. How does this affect my GSI that we have received this year.

[ganrattan]

I am planning to purchase a house with money from my line of credit to purchase and fix up, and then flip. I could realise a capital gain of 20K to 30K which will help our retirement and pay off debt. I have Capital Gains loses of around 5K from previous years to cover the taxes. Will we be subject to penalty for the GSI that we have received this year and have pay back the CRA. Should I wait and sell it next year after I disqualify myself from GSI status. We have used Turbo Tax the last several years and have been very happy with the results.

[TurboTaxJennifer]

Glad to hear you are a fan of TurboTax. We love hearing that!

The Guaranteed Income Supplement (GIS) is calculated based on your previous tax year's income meaning there's no repayment factor. If your income is too high for 2018, you just won't qualify for the GIS beginning in July of next year.

Your potential capital gain will be a factor in your eligibility for the GIS, even with the prior-year capital loss. The flow of the income/deductions on your tax return is set up in a way that the loss doesn't factor into the GIS equation. Here's why:

The number used to calculate your eligibility for the GIS comes from line 234 of your tax return (and includes your capital gains). Carried forward capital losses are not deducted until line 253. In essence, your prior year capital loss won't affect the calculation of the GIS eligibility. But, as you pointed out, the loss will help with any potential tax liability.

Although I can't comment on whether it's better to wait to sell the house and realize the gain, my best advice is to run a test in TurboTax to see what your tax situation will look like with and without the gain. The value for credits, etc. don't change much year over year so set up a test return in TurboTax 2017 using your best estimate of your income, etc. (or simply your info from last year). Then add the gain. 

No need to pay for the test return as you won't be filing it.

Here's a link with more information on the GIS calculation: https://www.taxtips.ca/seniors/gis.htm