House Transfer After Death & Capital Gains

by Tax Guy - Burlington Accountant on March 13, 2009 Print This Post Print This Post

Question: My Mother has died and left her house to all four of her children but she also stated in the will that her youngest son could live in the house for 2 years after her death. Can we leave the house in her name until we sell it? Will we have to pay capital gains even though it will be my brother’s principal residence?

When your mother passed away each of the four of you became the owners of the property and it makes no difference how you leave the registration. For tax purposes each of you became 1/4 owners of the house and the cost base is as of the date of death.

When the property is sold, your youngest brother can claim the principal residence exclusion for each year he was in the home. The remaining beneficiaries will be taxed on gains from the date of death to the date of sale unless you also occupy the property.

Note that the taxable amount of the gain for each beneficiary subject to tax would be 1/8th of the gain.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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{ 4 comments }

jerry February 7, 2012 at 9:16 am

We are two boys in my family our parents past away about 10 years back, they had a house under my fathers name, after both my parents death I don’t know what happened to the will but we don’t have one…I wana know how then do I go about changing ownership to my name and brother…and something extra can’t the municipality cancel all the debts like electricity and water as they were stopped being paid after my parents death.

Tax Guy February 7, 2012 at 11:02 am

You have a legal issue and need to hire a lawyer.

Dan June 8, 2013 at 9:26 am

My Father left a will with me as the beneficiary of the cottage.
There is a capital gain to be addressed by the estate, however I have a personal capital loss. Since I am inheriting the cottage can I place my capitol loss against the capital gain?

Tax Guy - Burlington Accountant June 20, 2013 at 6:49 am

Dan,
The capital gains accumulated until your dad passed away this taxable only to your dad. That capital gains cannot be offset by your asses.

If the cottage had lost value from its value at the date of death to the date it was ultimately transferred to you, then that loss that loss may be claimed by you.

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