Humber/Ontario Real Estate Course 1 Exam Practice

From a taxation perspective, which of the following is NOT typically considered a capital gain?

1. Rental revenue of $42,500 generated by the landlord of a multi-unit rental property.

2. A residential investment property bought for $423,000 and resold ten years later for $712,900.

3. An individual selling a cottage for profit without active involvement in real estate trade.

4. An investor forced to sell a property after five years due to financial issues.

5. A commercial property flipped within one year yielding substantial profit.

6. Sale of inherited property that appreciated in value.

The correct answer is: Rental revenue of $42,500 generated by the landlord of a multi-unit rental property.

A capital gain is typically realized when a capital asset is sold for a greater price than its original purchase price. In this case, rental revenue generated by a landlord would not be considered a capital gain as it represents ongoing income from the rental property, not a one-time sale or disposition of a capital asset. The other choices involve selling properties or assets for a profit, which would be more likely to result in a capital gain for tax purposes.