Inheritating a condo from mother how much tax?
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.
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’s 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.
---------------------------------------------------------------------------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’s 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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