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QUESTION:
Our property in Toronto remains registered at Land Registry Office in =
the name of the Estate of my Late father who passed away on October 17th =
2000 (2 hours before the 50% inclusion rate on capital gains came into =
effect the following day), and willed the property to his daughter and =
son in equal shares. I (the daughter) have been the sole occupant of the =
home since our father remarried in 1982, paying for the cost of upkeep =
and maintenance, such as taxes and insurance. My brother is married with =
three children and owns his own home. In 1994, our father crystallized =
capital gains on the property for uses to take advantage of his $100,000 =
cap gains exemption. As a result, to obtain a Clearance Certificate on =
the Estate, additional capital gains had to be paid by the occupant of =
the home and my brother. The property is now free and clear, but what is =
the best way to proceed for future tax planning purposes. Do the =
fairness measures of the Income Tax Act allow a grace period for the sa
I, the daughter, should be able to claim the home as my principal =
residence and be exempted from additional capital gains from the time of =
my father=92s death. However, if the estate is transferred to the names =
of both siblings (as per Will & Last Testament), will my brother become =
liable for capital gains on his half of the proceeds from the eventual =
sale of property, or are both co-owners (tenants in common) responsible =
for any accrued capital gains? Assume the property has appreciated =
$100,000 since the year our father died. At the moment I am 64 years old =
and my brother is 61.
Perhaps my brother should sell his share of the property to me for =
=93love and devotion=94, and thus escape any taxes in the future when =
the property is sold. I believe such a sale is legal. =20
Please advise what we should do. Thank you.
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=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
david ingram replies
In the old days, leaving it in the name of the estate meant it was all =
taxable as "the estate of Jean Smellie" found out when it had to pay =
capital gains tax when a widow stayed in the house after her husband =
died. =20
The law was changed however, and your half is free as your principal =
residence. Your brother;s half is going to be taxable. He can give it =
to you or sell it to you so that it is all tax free to you in the =
future.
However, any gain while he has owned half is taxable to him and you have =
already found the parking meter rules applied to your father's estate in =
the first place. Timing "is' everything.
With three children, etc., your brother likely wants and even needs his =
half of the value. Perhaps you should consider selling this house (if =
it is too expensive for you to buy half) and taking your half and buying =
a paid for townhouse or condo or smaller house that you can afford on =
your own.
I am 61, in the middle of a divorce and have three children (youngest =
12) at home as an example. Those kids and ex wives are expensive =
especially when they hire lawyers who only see their client with $350.00 =
an hour stenciled across their forehead. If I was your brother, I would =
likely be wanting my half even though outwardly, many would think I was =
mean wanting my share of the house you have lived in for 22 years.
Hoping this helps, I remain
david ingram
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=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321=20
[email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed =
information or consultation and is to be regarded only as general =
comment. Nothing in this message is or should be construed as advice =
in any particular circumstances. No contract exists between the reader & =
the author and any and all non-contractual duties are expressly denied. =
All readers should obtain formal advice from a competent financial, or =
real estate planner or advisor & appropriately qualified legal =
practitioner, tax or immigration specialist in connection with personal =
or business affairs such as at www.centa.com. If you forward this =
message, this disclaimer must be included."
David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321=20
[email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed =
information or consultation and is to be regarded only as general =
comment. Nothing in this message is or should be construed as advice =
in any particular circumstances. No contract exists between the reader & =
the author and any and all non-contractual duties are expressly denied. =
All readers should obtain formal advice from a competent financial, or =
real estate planner or advisor & appropriately qualified legal =
practitioner, tax or immigration specialist in connection with personal =
or business affairs such as at www.centa.com. If you forward this =
message, this disclaimer must be included."
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