Canada- Capital Gains, 2nd Home

Hello,

My first time using the site so thanks for any help I get.

I live in Canada and own a second home. Since owning the property the value has grown considerably. I am looking to pass the property down to my son and try to avoid, or at least minimize the capital gains that either of us would be responsible for. Someone suggested there is a way to gift properties but am I still then responsible for a capital gain tax?

Thanks, TMT

Reply to
Andrew Dude
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This forum typically handles US taxes, not Canada. However, I prepare Canadian and US returns.

Your gift to a child will result in a deemed disposition of the property and trigger capital gains tax. However, it is possible to evaluate which of the two properties was a principal residence. Given that you mention son, you will also need to view the situation with respect to your spouse as each household is permitted only one principal residence.

The situation also changes if your son is under or over the age of 18.

The above answer is general in nature and may not necessarily be appropriate to your particular situation. Professional assistance is suggested.

Reply to
parrisbraeside

------ I don't know about Canada. In the US, you can give the property subject to a gift tax (if it is large enough) or leave it for the heirs who inherit it at the fair market value which avoids a lot of potential capital gains if they sell it. There is an Estate tax if the estate is large enough. Canadian law is probably a lot different but there may be some similarity.

Reply to
Diogenes

None of those apply in Canada. Canada does not have a gift tax or estate tax. Inheritance occurs with a deemed disposition which means capital gain tax occurs.

Reply to
parrisbraeside

The basis transfers with the gifted property. So gifting does not save capital gains taxes. I assume what you meant is that as long as the son does not sell the property there is no capital gains tax.

-- Drew Edmundson, CPA Cary, NC

Reply to
Drew Edmundson

Reply to
Diogenes

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