Canada Inheritance from for US residents


My wife and I are both Canadian in the last step of taking on
us citizenship. We but have fathers left in canada that are
older and would inherit real estate and money. What are the
tax implications cross border. Is our citizenship going to
change the tax implications. Is there anything we can do to
minimize taxes?

david ingram replies:

Your fathers final returns will determine the Canadian capital gains tax or tax on RRIF accounts, etc.  There would not be any tax on pure cash deposits.  If there was an estate with multiple heirs, then the estate would likely pay tax on any internal earnings until dispersed although the executors could elect to disperse imnternal earnings to the heirs until settlement.  If the executor did decide to disperse internal earnings by way of a T3 Canadian estate return, the executor would have to withhold 10% tax on any interest, 15% tax on any dividends and 25% tax on any rentals and sale of real estate.

After the final settlement, any capital dispersed to you would be tax free in Canada and the US.

Your new citizenship will not change the eventual taxation.  Your residence outside of Canda generates the withholding tax rules above.