In Canada, there is no inheritance tax. This means that you do not have to pay taxes on the money or property that you inherit. However, there are some tax implications that you should be aware of if you inherit property.
Capital Gains Tax: When you inherit property, you are deemed to have acquired it at its fair market value on the date of death of the deceased. This means that if you sell the property, you will have to pay capital gains tax on the difference between the fair market value on the date of death and the sale proceeds.
The capital gains tax rate in Canada is 50% of the net capital gain. However, there are some exemptions and deductions that may be available. For example, if you are a principal resident of the property, you may be eligible for the principal residence exemption.
Probate Fees: If the value of the deceased’s estate is over a certain amount, probate fees may have to be paid. Probate fees are charged by the provincial or territorial government where the deceased resided. The amount of the probate fees varies depending on the value of the estate.
Income Tax: If you inherit income-producing property, such as a rental property, you will have to pay income tax on the income that the property generates. This income will be taxed at your regular income tax rate.
Other Taxes: There may be other taxes that apply to inherited property, such as property taxes and land transfer taxes. The specific taxes that apply will vary depending on the type of property and the jurisdiction in which it is located.
There are a number of tax implications that you should be aware of if you inherit property. It is important to consult with a tax advisor to discuss your specific situation and to determine the tax implications of inheriting property.
This article is for informational purposes only and is not legal advice. Contact us today to discuss your specific situation.