Inheritating a condo from mother how much tax? - international non-resident cross border expert income tax & immigratio


QUESTION: My mom recently passed away and owned a condo.  The title is now being transferred to my sister and me in order for us to sell it.  Do we pay capital gains on this sale and what percentage does the government take?  What a shame, a person works all their lives for what and the government takes half.
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david ingram replies:

The tax depends upon how much more you get for the house over what it was worth when your mother passed. If you do not get any more, than there is no tax.  If it goes down in value between date of death and sale, there is no tax.  But that has not happened lately in Saskatoon.  In fact in the last year Saskatoon has recorded the second largest increase in Canada with up to 25% increases.  As Judy Monchuk's July 5th CP article said

"Saskatoon recorded Canada‚Äôs largest property jumps in the second quarter: with bungalows costing an average $281,250 - more than $100,000 over the same period in 2006.( 35.55%  increase) Two-storey homes were even more expensive, going from $196,500 to $305,000. Regina bungalows sold for $204,000 over $143,250 a year earlier.
"  -

SO!

Assuming it was your mother's personal residence at her death, any profit from the day she bought it is tax free.  In fact, it was considered to have been sold the day she died and you might even want to file a form T2091 with her final return.

What is taxable in any increase in value from the date of death.

Saskatoon has had a good increase in the last year and you should get more than it was worth on the date of her death..

So let's pretend it was worth $100,000 on the date of death and you sell it for $130,000 and it costs $8,000 for the costs of sale.

The profit would be $22,000 divided equally bvetween you and your sister.  You would each report this on schedule 3 of your T1 tax return for the year you sell.  When you get to the bottom of schedule 3, it tells you to divide the capital gain in half and report half on line 127 of your tax return.  So you would each owe tax on $5,500 in this scenario.

The rates are different for each province but in general, if your other income was $30,000 or less, you would owe about 25% tax or $1,375.00.  If your other incoem wa over $125,000, you would owe about 45% or $2,475 (on your $11,000 share of the profit) which equals 22.5% of the profit of $11,000.

I don't know where you got the 'government takes half' part but that just isn't or won't be true in this case if it was her principal residence.
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This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
 
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,000 would be the same with one rental
 
$1,200 would be the same with one business no rental
 
$1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,600 would be for two people with income from two countries

$2,800 would be all of the above and you moved in and out of the country.
 
This is just a guideline for US / Canadian returns
 
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $150.00 up.
 
With a Rental for $350
 
A Business for $350 - Rental and business likely $450
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
 
8891 forms are generally $50.00 to $100.00 each.
 
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.
 
Just a guideline not etched in stone. 
 
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