Will I lose my home when my aging father passes away?

I received this question from a reader about tax on a property inherited from a parent. Though I have blogged several times about this topic, it's worth covering again. Here's the question :

"I live with my 82 year old father. He intends to leave this house, our principal residence, to me on his death. If he passes, will I lose my home? I don't have very much money to pay any taxes and my father is not in a position to leave much behind. "

To answer this query, I'm making some assumptions. I'm assuming that your father is making a will stating his intention to leave the house to you, or that in the absence of a will you are the only child. I'm making these assumptions because your question is about tax and I want to focus on that.

Because the house is your father's principal residence, there is no tax on the transfer to you. In Canada our inheritances are not taxable so there is no tax when you receive the house.

That's all simple enough, but let's look at a worst case scenario. If your father leaves behind debts such as mortgage, credit cards, loans or unpaid income tax, the house could have to be sold to pay all of that first.

Even if you put the house in joint names this would not prevent the loss of the house if there were debts or taxes. This is because inter-generational joint property is still considered to be in the parent's estate.