Q&A: Saving Taxes
Facing big capital gains tax bill, this couple looks for ways to keep more of their profits.
Q – My husband and I have capital gains of $80,000 between us. Does it make sense to buy RRSPs to offset income tax? We have $40,000 in contribution room available. We are both 66 years old and retired. – Mary A.
A – Investing some of your profits in an RRSP would certainly cut your capital gains tax bill. In fact, given your contribution room, it would probably eliminate it entirely since 50% of your gains are tax-exempt. All future profits would be tax-free until the money is withdrawn, at which time you’d pay full rate.
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