Tax/Capital Gains/Death in Family

Winter 2016 CSANews Issue 101  |   Posted date : Dec 12, 2016.Back to list

Bird talk - Le Jaseur
Our mom passed away and dad’s been gone for 13 years. Mom did change the deed of her duplex in Florida into her three children's names and removed her name from the deed three years ago. She was advised to do this by someone, but now we are not sure? We are wondering about capital gains taxes, etc. that will arise if we either keep it or sell it. We would like to keep our parents' place in the family but may not be able to, depending on the amount of capital gains and taxes, etc. Mom and dad did do some kind of rate capital gains re-evaluation and payment in 1994 to save on capital gains in the future. The property was purchased in approximately 1978. Mom has always filed an American tax return. Has anyone dealt with this type of issue before? Out of the utmost respect for our parents, to keep this property for generations would be wonderful. Thanks for your help.

Paul K
Elora, ON

Response:
Ed.: Your mother and father got some very good advice to protect you. Since the property is now in the three children’s names, there is no capital gains tax to pay and you have to do nothing further. If you decide to sell it, however, the increase in value since 1994 would be subject to tax. What often happens is that one child will want to get the cash out. If you purchase their share, then that share (one-third) becomes subject to capital gains tax in the seller’s hands. You can’t give them a really “good” deal, as the taxman will want the share sold at fair market value. You could take less, of course, but the tax will be on the current assessment.

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