MoneySense is owned by Ratehub Inc., but remains editorially independent. MoneySense is a digital magazine and financial media website, featuring content produced by journalists and qualified financial professionals. How to save on capital gains tax when selling a rental propertyĪ reader wonders if he should buy his parents’ rental property or wait to inherit it, based on the capital gains implications.There are tax, estate and other implications when inheriting real estate, even from family. Capital gains, taxes and more: The implications of inheriting real estate.Whether you’re giving to a family member or a cause you believe in, these considerations will help ensure your gift is maximized-for both the recipient and you. Financial gifts: What you need to know before giving money or investments.Joan and her partner own the condo her son lives in, but they want to transfer ownership to him. What are the taxes on transferring real estate to your kids?.When she filed her tax return, she was surprised to learn that the Canada Revenue Agency viewed this as a deemed disposition of half the value of the account, triggering capital gains tax. Consult a tax professional if you have questions about deemed dispositions.Įxample: “When Elvira got married, she changed her investment account from an individual account to a joint account with her husband. Other situations that may involve a deemed disposition include trusts, gifts, transferring assets from a non-registered account to a registered account, changing ownership of an investment account from sole to joint ownership, changing how a property is used (for example, changing a rental property into a principal residence) and more. This is sometimes referred to as departure tax.ĭeemed dispositions when you die, appropriately known as a death tax, is designed to prevent families from perpetually avoiding taxes by handing down assets from generation to generation. Even though you continue to hold the investments, you are taxed as if you sold them. For example, if you leave Canada permanently, you may be deemed to have disposed of your assets and must pay tax on any capital gains.
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