My question is: Canadian-specific QUESTION: My parents are selling my spouse and I an 8-unit apartment evaluated at $485,000 (located in Quebec). They paid $320,000 approximately 5 years ago and are selling it to us for the same amount. If we sell the apartment in the future we will have substantial capital gains. Can my parents sell the house to us for $420,000 (we have the minimal downpaymwnt) and give us a gift of $100,000 in order to reduce our capital gains in the future? If they give us a gift, will the purchase price still be considered $420,000, and capital gains calculated on this amount and not $320,000? Will my parents have to pay capital gains on the $100,000 difference even though they are giving us a gift? I guess what I'm trying to ask is what can be done in order to reduce capital gains for all parties, my parents and my spouse and I? ----------------------------------------------------------------- ---------- david ingram replies: Your parents can sell it or give it to you. However, when disposed of to a non-arm's length relative, they must show it as disposed of at FMV and you get it at FMV. They owe tax now on the $165,000 Capital Gain. You should likely put a mortgage on the units for enough money to pay them to pay the tax. 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