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| *Ostroff, Fair and Company>>>Canada Taxes |
In live in Canada and inherited a house and sold it. Do I have to pay taxes on the house sale? |
I looked up on a tax site and saw that in Canada you aren't taxed on inheritances. I'm not sure if that is the same as inheriting and then selling. At the time that the estate of the decesased transfers title to the property to a beneficiary, the estate is deemed to have "sold" that property at its current fair market value. If the property was used as a principal residence by the deceased prior to his/her death, no income tax will be payable by the estate on the increase in value between the deemed selling price at death and the original cost of the property to the deceased. The beneficiary of the estate is deemed to have acquired the property at its current fair market value (cost base) on the date that title to the property transferred to that beneficiary. If the beneficiary decides to sell the property immediately, the liklihood is that there will be little or no capital gain since the selling price will be very close to the beneficiary's cost base. To the extent that there is a gain it will be subject to income tax in the hands of the beneficiary. At the present 50% of the gain would be taxable. If the beneficiary moved into the property and used it as a principal residence prior to selling it, tax may be avoided entirely on any capital gain realized on a subsequent sale. Care must be taken to ensure that the property is in fact the principal residence of the person making the subsequent sale. Needless to say, the Canada Revenue Agency is cognisant of the fact that people do try and use the exemtion on sales of a personal residence as a tax doge in some circumstances and look carefully at these transactions which are a matter of public record. call a lawyer, they'll probably tell you over the phone for free. before you sold the house the lawyer who handled the deceased estate should have explained the options. there is a way to sell an inherited house and proper forms to submit at the end of the year, if you did this process then your clear. if not, be prepared to pay up Canada, of course!I know absolutely nothing abot this, but I know my country so I would advice you to put aside the tax you owe so you don't getcaught off gard in April. You don't have to pay taxes on the inheritance itself, but you have to pay taxes on the money you make on it. I know that's how it works for investments, but not sure on a house. Go to H&R - they won't charge you to just ask a question. yes, if you sold it for more than your benefactor paid for it. ie: if the house was bought in the 60's for $20000 and you sold it from the estate for $100000, then capital gains tax will be payable on $80000 ($100000-$20000). capital gains are taxed at a lower rate than regular income, though. sorry for the bad news. |
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