Capital Gains on rec property in Alberta - THREE Valuation Days

n 1951 my mother-in-law was given a recreational property in Alberta. It has increased about $ 135,000 in value. In 1994 mother put the property in joint tenancy with one of two daughters. When mother passes (soon), I understand she is deemed to have sold the property to her daughter for full market value. Can your office help me with the capital gains tax preparation for mother's estate? Thanks.

david ingram replies:

There are several possibilities for dealing with this and in particular, three distinct valuation days when the property's Adjusted Cost Base for capital gains tax purposes

1. There was no capital gains tax until Jan 1, 1972 on recreational property - Therefore, in any case, there is no tax on the value from 1951 to 1972.

2. If you parents had a recreational property and a home in town somewhere, there is no tax on the recreational property until Jan 1, 1982.

3. >From 1985 until Feb 25, 1992, up to $100,000 of capital gains was tax free. On Feb 22, 1994 this was cancelled but anyone who had an unrealized (it had not been sold) capital gain was allowed to "gross up" or "top up" the value of their property by pretending that they had sold the property and calculating the capital gain and exempting it on form T664.

Since your mother transferred the property to your sister in 1994, I would presume that this form was filled out for the half she did not give away and she claimed the part that she did give away tax free when filing her 1994 tax return in April, 1995.

The answer to your question is that my office is well qualified and set up to handle the tax returns on the sale of the property. Just to show off a little, and to answer the same question for those Winnipeggers who have a place at Bemidji, Minnesota or the Vancouverites with a place in Sudden Valley or Point Roberts and the Montrealers or Haligonians with a place in Florida, there is another valuation date that occurs if the property is in the United States.

Until Jan 1, 1985, there was no capital gains tax imposed upon a Canadian with US property. Therefore, if this property was in California or Washington or Florida or Texas, we would be looking at yet another Valuation day.

And to give credit where credit is due, Doug Lentz, a CPA in Bellingham is the "ONLY" US based CPA I have ever seen get this right. Heaven forbid, you should wander into a tax preparation office in Scottsdale or Fort Lauderdale or Palm Springs. The returns are just about "always wrong"

And they say Income Tax Preparation is boring!


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