Thursday, January 27, 2011

Is there capital gains tax when I sell an inherited property?

The following is a question I received from a reader. It's a variation on a question that I hear a lot, so I thought I'd address it here. Just a caveat - when you ask me questions here on this blog, I don't get to know the whole picture, so my answers are necessarily general. You should always back up this information by talking to a lawyer or accountant in person.

"My father died this past November and left everything to myself and sister, including his house/property. If we sell this property this summer, do we have to claim a capital gains? If so, on what part?"

On the transfer of the property from you to a third party, you are probably going to be liable for capital gains tax. The period that you're on the hook for is from the date you acquire it to the day you sell it. Since this period of time will be only a matter of months, the property might not incur too much of a gain in that time, and therefore your tax will be small. You and your sister can split the tax between you as you are both inheriting the property.

Note that if the property in question is your principal residence (which doesn't seem to be the case here), the tax is not payable on your sale of it, because this is an exception to the general rule of capital gains.

Now let's look at the first transfer - that of the property from your father to you. Since you describe it as "house/property" rather than just "house", I'm assuming there is something more than just a house. When these items transfer to you, there is no tax for you personally to pay. However, there certainly may be taxes that must be paid by the estate.

When your father passed away, there would have been no capital gains tax payable on his home (principal residence). Note that only 3 acres of property can be included in the principal residence exemption. If there was an additional property, such as a cottage or revenue property, there is capital gains tax payable on that property. Keep in mind that if the property sits in the name of the estate for a long time, there may also be tax payable on the increase in value while it's in the estate name.

As you can see, it seems a simple question but the answer is complicated. This is why I recommend that you sit down with an accountant to figure out the tax details.

63 comments:

  1. My mother's 6 quarters of land were sold at the end of January 2010. These quarters have been in her possession since 1972. She passed away in 1996. The quarters were probably worth on the average of about $20,000 at the time of purchase which would be a total of $120,000. They were sold at a total sale of $1000072. Each of eleven family members have inherited the moneys from this sale. What capital gains would there be in this case if any?

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    1. There should be no capital gains tax assessed against your Mom's principal residence. Keep in mind that the principal residence exemption doesn't cover an entire quarter, but only a small number of acres. So there will be capital gains tax on the remainder of the "home" quarter, as well as on all of the other quarters. To get a ballpark of how much the tax would be, subtract the ACB ($120,000) from the sale value ($1,000,072). The difference between them is the capital gain. Half of the gain is taxable. The tax should be paid by your Mom's estate before any moneys are paid out to the 11 beneficiaries. I'd use an accountant for this, given the large amount of money and the number of people involved.

      Lynne

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    2. farm land is exempt

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    3. Farmland can be exempt, but not always. The exemption for farmland applies when land that is being actively farmed is transferred to someone else who is actively farming. There are other requirements as well. The fact that land is zoned as farmland is not enough to create an exemption; it must be actively farmed.

      Lynne

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  2. My principal residence was in Canada and now it is in the USA. My Canadian home is up for sale. When this home sells, wlll I have to pay a capital gains tax since my principal residence is in the USA? We return to CAnada every summer to clean up the home and then return to the states.

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  3. My question is related to capital gains versus probate fees. My mom's house has increased in value by $250,000 since it was purchased in the forties. Upon her passing, hopefully not for awhile yet, the house will be passed on to my sister, brother and myself. Is it better financial planning to go through probate or transfer the home to the children before her death ? We live in Nova Scotia and all of us presently own our own home. Capital gains would apply, if we go that route, but at what date...initial purchase price or date of sale of the house.
    Thanks, Barry

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    1. There's a lot more involved in financial planning than just what to do with the house, but since I don't know about any of the rest of it in this case, let's just talk about the house.

      When your Mom disposes of the house, there will be no capital gains tax owing, assuming that it's her principal residence. Doesn't matter who receives the house (in terms of tax) because the transaction that's being taxed is the house leaving her possession.

      I am not in favour of putting a person's home into the name of the children while that person is still alive. Any one of you three kids could get divorced, or get sued, or a dozen other things that could cause a loss for everyone involved. The risk to your Mom is too great, in my view. Also, why create a tax situation for the rest of you if you don't have to?

      Also, please re-think the concept of passing the house from your Mom to all three of you. Is there any reason why the house shouldn't be sold and the proceeds divided? Having that many siblings on a title pretty much never works out well.

      Lynne

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    2. Many thanks for your quick response. You have helped clear up some concerns we had and now we are better equipped to move forward, choosing probate over capital gains.

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  4. Hi Lynne
    My dad just passed away in February, my mother is still alive and so everything obviously reverted to her. I am her soul child and on her death everything will pass to me. She owns her own house as do I. I have two children both young adults. One of my children has special needs but with support he will manage to live on his own which is both his and my preference. Our crazy plan is that we will move into my mothers house. Eventually make it into two appartments so that my chid with special need has somwhere to live. I will live in the other appartment. My other son will either rent my current house to live in or I will have to sell it to finance the renovation on my mothers house. I have a hensons trust set up for my son with special needs. I do need to make sure I have as much money as possible. So here is my question. How can I keep as much money as possible for the plans we have?

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  5. Hy Lynne, I am an only child and therefore my mom and I put the house on her name as well as my own. I know I will have to pay capital gains when she passes and I sell the house. My question is say her health declines to the point where she will have to sell and move into nursing home. Will I still have to pay capital gains on my half?

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  6. Good Day Lynne
    You have probably have answered this before. My mother lives in a large house and her will reads that all proeeds to be divided equally amongst the four children still living.The question keeps coming up about capital gains on the sale of the house after her passing. i feel the will is quite explicit division amonst the four no capital gains after the sale of the house

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    1. It sounds as if you mean that the will says there is to be no capital gains tax. If so, you should know that the will has no say in whether there is going to be capital gains tax assessed. Having said that, there should be no tax when the house transfers to the kids, or if it's sold quickly by the estate and the funds split between the kids. For your own sakes I sincerely hope your mother isn't going to transfer the actual house to the four of you, as that is disastrous 99% of the time for reasons mostly unrelated to tax. Now if the house is transferred to the four of you and later you four decide to sell it, there WILL be capital gains tax on the sale (if it increases in value), no matter what it says in the will.

      Lynne

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  7. My husband is an only child. His 95 year old mom is in a care home. Her will states everything is left to my husba nd. He wants to sell her home and seem to have problems. He is PO to banking but not for home. His lawyer says he has to file for guardianship and now he says that her assets are more than his. So now I have to make up the shortfall.. lawyer has added her house as part of her assets and the house is not yet sold. How? This has gone on since Feb. Meanwhile this house is sitting there costing money. Taxes, water , power and someone to cut grass.. we are so stressed. There is always something else that pops up. Are we getting the runaround with this lawyer? By the time this over there will be nothing for my husband.

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    1. The lawyer is right that your husband can't sell his mother's house. She is alive, so the will is of no use. you've said there is only a power of attorney for banking that doesn't extend to the house. That sounds normal too. I assume that his mother doesn't have capacity to make a new power of attorney to cover property, otherwise that would have been done. If that's so, then the next step is to ask the court to appoint your husband as trustee. I'm not going to quibble over the fact that you said "guardian" instead of "trustee" because these roles are called different things in different places.

      All of that made sense to me, but the next part about you making up the shortfall makes no sense at all. I have no idea what you mean by this. So what if the mother's assets are more than your husband's assets? And shortfall for what? Why are your personal assets and those of your husband involved in this at all?

      Yes it makes sense that your mother's house would be included in a list of her assets. Doesn't matter whether it's real estate or cash, it's still an asset.

      You are not paying for the taxes and water etc yourself, I hope. The asset belongs to your mother-in-law so she should be paying for those. Your husband has the bank POA so that shouldn't be a problem.

      Applying for guardianship or trusteeship can be a complicated court procedure, but not so complicated that it takes 7 months. Either there is something else involved that you haven't mentioned, or someone is dragging his heels.

      I know you're concerned about the assets being depleted but keep in mind that when the house is sold, your husband doesn't get the money. It belongs to his mother until she dies, and if the money is used up, for paying for her care, for example, then he could well end up with nothing.

      Lynne

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  8. Hi Lynne,

    My husbands father passed away last December, and there are 3 siblings. The house was sold to one sister, no issues. There is a parcel of land that was purchased by my father in law probably about 40 years ago. We had it appraised around $64,000. We are looking to sell it. Are we going to have to pay capital gains, and on what portion. The value has not changed sinse last Dec. We don't know what he paid for it originally, but probably not very much.

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    1. Hi Lori,
      From what you've said, yes I would expect that there will be capital gains tax to be paid. This is because a) the land is not your father-in-law's principal residence, and b) he didn't pay much for it and it's now worth $64K. I'm not sure what you mean by "we" are going to sell it and "we" might pay taxes, unless you and your husband are executors of the estate. Assuming that's the case, you (i.e. the estate) pays tax on one-half of the increase in value, calculated from the day your FIL bought it to the day it's sold.

      Lynne

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  9. My father passed away in 2008 and left a cottage to my sister and I. We paid the capital gains on his 2008 income tax return at a property value of 250K-original cost. We sold the property in July 2012 at 230K. How do we apply the capital loss (250-230=20K)? Will it be against the 2008 income taxes for my father, or mine and my sister's income tax for this year?

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  10. I immigrated to Canada in 2002. I owned a house before immigrating. I sold the house in 2011 and had the money transferred to Canada in 2012. how does capital gains apply.

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    1. If I were you, I'd ask an accountant.

      Lynne

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  11. If you inherited a property, and you’re planning to sell it, one of the best things to do is to sell it as soon as possible to avoid a higher capital gain tax. You won’t be exempted from capital gain tax because the property increases in value since the date of death of the person from whom you inherited the property. Inheriting a property from your parents can be quite complicated, so it is better if you have a legal advisor to help you with this matter.

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    1. I wholeheartedly agree Audrey. It breaks my heart to see how many people get into legal, financial or family trouble just because they didn't sit down with someone with expertise in these matters.

      Lynne

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  12. What are the tax consequences if a US citizen or an Indian (India) citizen who owns significant stocks in a privately held Canadian mining company dies and wills the assests to his brother who is in US or in India.

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  13. In June 2011, my father added my brother and me on title of his property, my brother lived in the house, my father was in a home and I living somewhere else, my father passed away December 2011. My brother moved out in may. We sold the house nov 2012 . Do we have to pay capital gains?

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  14. hi
    my parents immigrated from Canada a couple of years back. they have sold their farm back in home country (India) and paid taxes on sale as applicable there. This sale happened right before they came to Canada on immigration. the money has been invested in a term deposit in the home country since.
    Do they need to declare in particular while transferring the money to Canada? Or do they only need to declare the interest earned on the term deposit.

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    1. You need an accountant to help you with this. Sorry I can't be of assistance.

      Lynne

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  15. Lynne,

    Fantastic web site. I have really learned a lot. Didn't find the answer I needed though.

    My FIL died in 1982. House in his name. My MIL never formally transferred ownership. So house is still in the name of my FIL's estate.

    Now my MIL is nearing the end, and she has a Will, but what will happen to the house?

    My FIL had 2 sons before marrying MIL and they had 2 daughters together.

    I don't think my FIL had a will. MIL just kept living in the house.

    Trying to help my wife with the huge headache of sorting out the house when her mom passes.

    Sisters don't feel comfortable talking about the issue with their mom.

    Thanks so much!!

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    1. From what you've told me, it seems likely that your father-in-law's house is not in the name of his estate, but in his name. This may seem like splitting hairs but it's vitally important. If it's in the name of his estate, his executor can transfer the house according to his will, or his administrator can distribute it according to law.

      However, you've said that you're not sure whether he had a will, so it seems unlikely that he had an executor or that anyone did anything about his estate. That's why I suspect it's in his name, not his estate's name.

      If your father-in-law had a will and you could find it, you would have to probate it to transfer his home. Assuming that there is no will, someone would have to apply to the court to become his administrator and thereby gain legal authority to do something with the house.

      Right now, the person with the first priority to apply for administration is his wife, but it sounds as if she is in no shape to deal with that. So the right to apply to be administrator is going to pass to his children - all of them. They'll have to figure out who is going to do that. Once that's done, the house will be dealt with according to intestacy law in your father-in-law's province.

      For heaven's sake don't let anyone put the title to the house in the names of all four children, unless they want the fighting to start immediately and carry on indefinitely.

      Yes, it's going to be a headache to sort out, but it won't be impossible.

      Lynne

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  16. I am estate executor for a frend, John, who owned a house that was his principal residence for many years. Five years before his death, he stored most of his furniture and household effects in the basement and garage, rented the house to tenants, and relocated to a town 70 km away for work. Under these circumstances, he could have retained principal residency until his death had he not been advised by an accountant to claim CCA against his rental income. (The accountant was unaware that John was terminally ill; John was ignorant of the tax implications of claiming CCA.) As a result, John's estate is on the hook for significant capital gains tax. As an executor, can I designate the house as his principal residence and amend his past tax returns to revoke the CCA claims that were made in error?

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    1. This is something you'd have to run by an accountant.

      Lynne

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  17. I am confused. My grandmother had a 10 acre farm which was where my father lived and raised his children including myself and my siblings. Upon my grandmothers passing, she left the farm for my father to live on and heldit in trust for her 3 remaining grandchildren including me.When he passed there was just the land title transfer of the property to surviving grandchildren and there is no need to probate. The farm is the primary residence for my sister and has been for my father and grandmother. As you expect there is some family conflict with my sister living there and myself and my handicapped sister. She wants to live there as long as she can and we could use the money for ourselves. She had an offer for 3 million but turned it down. My question is regarding capital gains tax. If for some miracle she decides to sell how would the capital gains effect us. When the farm was purchased by my Grandmother she paid 20,000 and at the time of her passing the fair market value was 240,000. When my father passed it was 3,000,000. It has stayed at about that value since my father passed in Nov 2011. The property is still in his name at the land title office held in trust for us grandchildren. My head is spinning, what do you think?

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  18. Hello,

    I am wondering about my own situation.. my parents put my name on our cottage's deed many years ago (20 or so). It's not a principal residence as she has her own home. My father has since passed, and now both my mother's and my name are on the deed. I know at some point my mother will pass, but I don't want to sell this property.. I want to keep it indefinitely. Would I have to pay capital gains tax when she dies, or because I already owned the property would it not be applicable? (ie, it won't go to the estate as I will already own it... we have full simultaneous joint ownership currently, as opposed to 50/50)

    Thanks for your help!

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  19. Hi Lynne,
    I am an only child and will be inheriting a rental property (at some point) that my parents own.
    My parents primary residence is currently in a retirement home. I understand I have to pay tax on the capital gain if I inherit the rental property but if we put my name on the deed while they are both alive, does that alleviate the tax?

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    1. Even though your parents reside in a retirement home, they can still own a primary residence. This is assuming that they pay for cost of care, as opposed to owning a unit in the retirement home. If they own the house that you call the rental property, and they don't own any other, they can designate that property as their primary residence.

      Lynne

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  20. Hi Lynne,
    My wife passed away last September. She had owned an apartment for our personal use since 2003. When she came down with cancer a year before death, the apartment was legally made into joint 50/50 ownership as were all of her bank accounts. Q1:Do I have to report a deemed disposition and capital gain on her 2012 final return? Q2: Do I have to report the same for my Return? Q3; If so is the capital gain for my wife based on 100% appreciation from the Cost Base at time of acquisition to when it was made joint plus further appreciation on 50% ownership to the time of death? Q4: In my case will capital gain be considered from when it became joint until a) the time of death or b) the end of 2012. OR- Hopefully I will just have to declare the deemed disposition and not incur any tax as the spouse and only beneficiary.
    Thank you for your help.

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  21. Lynne,
    Several years back my grandma passed away. Her trust was in her sons name. He inherited all the farm land. He gifted my mom 40 acres of it. It was put in her name and listed agricultral land. When my dad had a stroke, they sold there residential house with 2 acres, and the additional land plot of 40 acres. The land was connected property. The last two years they have had to pay a large amount in capital gain. Im just wondering
    If the tax accountant was correct in there filing? If anything was overlooked. Thank you for your time.

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  22. Lynne,

    My dad has been added to the title of my grandpa's principal residence. When my grandpa passes away, what tax will my dad have to pay? Just capital gains tax on any appreciation in value between the time of death to time of sale? He has power of attorney and living will privileges established as well(my dad). Also, any assets will be split between my dad and his brother 50/50. I was unsure whether the lump sum my dad receives upon sale of my grandpa's house would be treated as income within a given year. Thanks!

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    1. I really think this is something that you should go over with an accountant.

      Lynne

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  23. Lynne,

    I inherited my parents' house three years ago. It has taken that long to sort through the contents and prepare the house for sale. The house was evaluated at the time I inherited it, so I have a baseline value. My question is, are improvements (specifically, redoing the roof, painting and plastering, replacing the kitchen floor) deductible expenses that could reduce capital gains? No one has occupied the house since I've owned it.

    Thank you.

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    Replies
    1. Yes, improvements can be used to raise the adjusted cost base of a property and thereby reduce capital gains tax. Check with an accountant to make sure you get all the deductions!

      Lynne

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  24. Hi, My wife and her sister inherited their father's primary residence a couple years ago. They've been allowing their mother, who was not married to their father at the time of his death, to live in the house. The house was assessed at $375,000 following the death. They are now planning to sell the house and expect to get around $550,000. Is the capital gain then the difference between 550,000 and 375,000 divided by 2? How much of that capital gain is taxable. Thank you.

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  25. Thank you for this excellent and informative blog!

    Our lawyer advised us to get paid professional appraisals for my recently deceased Dad's home, home contents, etc.

    We paid for the home appraisal. Real Estate agents are now telling us the fair market value is higher. My Dad's accountant is telling us this is not good -- we will need to pay higher capital gains tax if we sell higher than if the probate is properly accessed and we pay just probate tax (+/- a more likely smaller variance in a good appraisal vs. expected sell price). Our appraiser and lawyer are advising we need both a Probate Tax Appraisal which is typically more conservative from a Fair Market Value Appraisal. Our accountant disagrees and advises we can use a free appraisal from a Real Estate agent.

    Questions:

    1. If we intend to sell the house ASAP, do we need both a Probate Tax Appraisal and Fair Market Appraisal?

    2. If we do not need both, is it acceptable to use a Real Estate agent to provide the Fair Market Value Appraisal? (The appraiser said he'd do one of these too for a small fee; Real Estate Agents will do for free).

    3. If we do not need both, can we just not submit the appraisal we paid for? Or, should we submit all appraisals (thinking to get a couple by Real Estate agents) and explain the difference.

    We are really questioning our lawyer at this time. We called CRA and they advised since my Dad doesn't have any really unique, high value items we can do the house content appraisal ourselves taking pictures and researching on places like Craigslist an anticipated value for things. We're detail oriented and diligent and just want to do this correctly and fairly with pictures and support for value assigned but would like to avoid the $4-6k cost for a house content appraisal we received in a quote.

    Question: Do you agree that executors & beneficiaries can prepare the content appraisal themselves?

    Thanks so very much for your help.

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  26. This comment has been removed by a blog administrator.

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  27. My brother and I share POA for our mother. Which has been enacted. We are also her trustees. We are both named equally in her will. Our father is deceased.

    Our Mom suffers from Alzheimer's disease and has recently gone to live in a care home. Up until then (3 months ago) my brother and his wife chose to live with and care for our mom so she could remain in her home as long as possible.

    My brother and his wife are still living in moms house and taking care of the property at this time. They would like to continue living there and make it their home.

    I agree with them staying there and don't have any issue with them having the house. I believe my parents would approve as well as they built the home and would want to see the family blessed by it.

    The concern is whether or not they can legally stay there without paying rent to my mom. I don't see that it is necessary. I also don't see the point of them purchasing the house and having to pay mortgage interest to a bank since my brother will eventually inherit the property.

    Will this cause issues for us later? Will we be forced to sell the house? What suggestions do you have for us so that this will go smoothly?

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  28. When it concerns tax and gains, it is always better to consult the professionals. In this case, an accountant or a lawyer. Thanks for this article though. It is very useful as we laymen are always in doubt when it comes to sensitive issues like these. We are thinking of selling the house that is currently leased out as storage. This piece of info is indeed very beneficial for us.

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    1. I agree Cameron, about consulting a professional. When it comes to taxes, people really should see an accountant. I always hope that people who read my blog will use the information they get here as kind of a starting point so that they feel a bit more in the know when they do go to see the lawyer or accountant.

      Lynne

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  29. Hi Lynne,
    My Mother has a small cottage on a small piece of land in NL that she wishes to transfer to me and I would like to keep. How do we proceed? The value is only approximately $10,000

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    1. Hi. You have a couple of options. You could hire a lawyer to take care of the transaction for you. If you don't want to do that because the cost of the property is small, you might want to go yourselves (both of you) to the land titles office to fill in the paperwork. You will have to file papers there that transfer the title from her to you.

      Lynne

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    2. hello lynne,
      i'm in a similar situation as the previous poster. my parents want to transfer their "farm" (actually more of an undeveloped quarter section) into my name before they, in their words " get too old and funny", but it seems as though they will have to pay capital gains tax on the land as though it is sold at fair market value if they do this. is this really the case?
      is there a way to put all 3 of us on the title without it resulting in massive taxes? i'm an only child so there is no one else to put on the title.
      any suggestions would be greatly appreciated.
      thank you in advance!
      c

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  30. My grandmother died in 1996. My other died in 2003 without taking care of the estate properly. The house was JUST sold recently for $300,000. The "taxation value" of the house in 1996 was $118,000. For the purposes of capital gains, should the value in 1996 be what the house SHOULD have sold for (which I believe could be higher than the government's assessed value for tax purposes), or do we have to go with the assessed value? Thanks.

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    1. You're going to need an accountant to sort out the tax implications. From a legal perspective, you might expect that your grandmother's will, as well as your mother's will, would most likely have to be put through probate simply to deal with this.

      Lynne

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    2. Thanks....and it all certainly has. The house has been sold and for except for the tax implications for myself and siblings it has been dealt with. It's just that property valuations are often far less than what the properties often sell for, so even if the house was "valued" by the city at $118,000, if it could have been sold for $160,000, I certainly would like to use that number if allowed. Thanks again.

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  31. Lynne,
    I plan to buy a condo for my parents to live and they don't have any other properties. If the condo is under my name, is there a capital gain when they pass away and I sell the condo? Or I should just buy the condo and put the their name in the title?

    Thanks a lot,
    Howard

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    1. Hi Howard,
      If you own the condo and it's not your principal residence, when it's sold you will be subject to capital gains tax.

      If your parents own the condo and it's their principal residence when it is sold, they will not be subject to capital gains tax.

      Make sure you consider more than just tax before you make this move. Consider that if your parents' names are on the condo, you will have no control over the asset. They could put a reverse mortgage on it. They could be sued for something like a car accident, and lose the condo.

      Lynne

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  32. Thanks Lynne. So looks like my bank mortgage specialist gave me the wrong information - as long as the property is for the parents' principal living, there is no capital gain even if it is under her own name. She said her another client did it but she cannot disclose the other client's information to me.

    Thanks again for your help,
    Howard

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    1. I don't know who you refer to when you say the property is under "her" name, but I think you have misunderstood. Just to be clear, the only way there is no tax is if it is the owner's principal residence. Don't confuse the fact that your parents live there with the legal concept of principal residence. If you own it and it's not YOUR principal residence, there will be tax when it's sold.

      Lynne

      Lynne

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  33. Everyone tells you that estate planning is a necessity, and yet no one really details exactly what estate planning is or what the goals of planning your estate should be. This article details the what and why of estate planning in Canada. Thanks for great job..

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  34. Lynn,
    My parents initiated a Transfer of Title of their home to me back in 2009 each retaining a life estate. At the time I thought it was a good idea but now they are in their late ‘80s and their marital relationship has since deteriorated to the point that they can’t live under the same roof. I need to sell the home and use the proceeds to purchase a condo for each of them. I’m concerned about the capital gains tax in Canada. The property has appreciated over $300K.
    As the owner of the deed this will all fall to me – correct?
    What are the tax implications?
    Any suggestions to consider would be greatly appreciated. I know I still need to sit down with a tax accountant but any heads up on the nature of the conversation would be appreciated.

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  35. I am thinking about selling my cottage property. It is currently not my principal residence. I want to avoid payment capital gains tax. I have owned the cottage property for 15 years and became the sole owner in 2008 when my spouse died. The value from the time we bought it to now has increased $300000. Can I gift the cottage to my adult children (neither currently own a home) and let them sell it without paying capital gain tax? Or how do I go about changing the cottage to my principal residence?
    Any questions or comments would be appreciated.
    Thx

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    Replies
    1. If you give your cottage to your children, you will have to pay the capital gains tax at the time you transfer it. The tax is on the gain while you owned it, regardless of how you dispose of it - sell it, give it, or you pass away. So that won't solve your issue.

      Certainly it's possible to claim your cottage as your principal residence, as long as the situation meets the criteria (for example, though you don't have to live there full time, it has to be available to live in and not rented out). Your accountant is the one who knows the ins and outs of capital gains tax the best, so I suggest you meet with him/her as there could be significant tax involved.

      Lynne

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  36. Daughter lived with parents all her life until parents both died. Last parent to die will specified that residue of estate which included the home be shared equally by daughter and her six siblings. Twenty years later, the property is still in the name of the Estate of the last parent to die. Daughter is now in her eighties and has always lived in the house. Her six siblings wish to waive their rights to any inheritance of the house. That would leave the right to the house solely to the daughter that always lived there. What documents are necessary to waive the rights? Is there any issue with the house being a principal residence of the daughter, the default owner under the will?

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    Replies
    1. There is no problem with beneficiaries waiving their inheritance, or part of it. Doing so will require a document that is signed and witnessed. Probate and associated documents vary from province to province, so there is no one specific form to which I can point you. You may end up getting a lawyer to make these up for you.

      One thing I want to point out is that the house is not the principal residence of the daughter, as she does not own it. The estate still owns it. This means that during the time period from the last parent's death to the transfer to the daughter, there will be capital gains tax if the property has increased in value. Make sure that everyone understands what the tax will be, and agrees before signing any waivers on who is going to pay it. Talk to an accountant if you are not sure what the tax might be.

      Might I also say, congratulations on having a family that communicates so well, and considers each other's needs. This is so rare.

      Lynne

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  37. We specialise in CGT and as your appointed tax advisors we would prepare your Capital Gains Tax computations, making sure all your entitlements of claims to reliefs and exemptions are carefully researched, sought and filed for with the Revenue.

    ReplyDelete

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