Is there tax on the sale of a father's house on the

This is a multi-part message in MIME format.
---------------------- multipart/alternative attachment
My question is: Canadian-specific
QUESTION: Hi David,
I read your questions and answers with interest on a regular basis and greatly appreciate the advice you give.
My question comes from my father who is under the impression that there is no death duty or capital gains tax payable on his principal residence upon his death.  I believe that this is not the case but I am not 100% sure of the rules here.  I know there is no capital gains payable by the owner on a principal residence when the owner sells, but if the owner is deceased then
presumably the heirs must pay the capital gains on the sale of the deceased owner's principal residence.
I look forward to your response.
Thanks again,
AXXXXXXXXX
------------------------------------------------------------
david ingram replies:
Assuming there is no summer cabin or winter chalet or other vacation home that your father has and wants to claim as a personal residence, your father's home in Canada is exempt from Canadian income tax when sold.
When a person dies in Canada, there is a deemed sale of all of their capital items including house, cabin, stocks,.bonds, vacation home, second residence, mutual funds, RRSPs, etc..
Therefore, your father's home is deemed sold at the Fair Market 
Value at the Date of Death. If sold fairly soon when there has been no increase in value, there is no tax to the heirs because the real estate commissions and advertising and legal costs will usually wipe out any gain up to 4% or so.
If there is a significant gain after the date of death, the heirs OR the estate would have to pay a small capital gains tax on the increased value between the date of death and the date of sale.
D'Arcy von Schleinitz and Sonja Clark in our office are very good with estate returns and questions.
David Ingram of the CEN-TA REALTY  Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 980-0321 - Fax 913-9123 [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 and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
 
---------------------- multipart/alternative attachment
An HTML attachment was scrubbed...
URL: http://www.centa.com/CEN-TAPEDE/centapede/attachments/f34f4e4a/attachment.htm
---------------------- multipart/alternative attachment--

Trackback

Trackback URL for this entry: http://www.centa.com/trackback.php/UsCa2003September000244.html

No trackback comments for this entry.

0 comments