My question is: Applicable to both US and Canada QUESTION: My parents purchased land in Ontario in 1969, and had a small cottage built. The family has used this as a summer place. My mom passed away in May, 2004 and now my Dad wants to tranfer the property over to 4 of his 8 children. We have heard that he must first pay some sort of capital gains tax on her half of the property. As far as I know, my parents have never claimed anything about this property on their US income tax forms. Does he have a tax to pay and how easy is it for him to tranfer the property over to his children? --------------------------------------------------------------------------- david ingram replies: Canada has a deemed sale on death method of dealing with estates. Therefore, your mother's half of the property became taxable upon her death. If it is rolled into your father's name, the tax can be delayed until he disposes of the property. However, under the US / Canada Income Tax Treaty, neither your mother nor your father is responsible for capital gains tax in Canada from 1969 to Jan 1 1985 For US purposes, if your mother's estate is taxable for estate tax, any capital gains tax can be credited (as a foreign tax credit) against US estate tax. If it is rolled over tax free and father then gives you the property, there will be Canadian Capital gains tax on the share he gives you. Of course, if the value is over $11,000 US each, there will also be US gift tax to consider. In this case, he would give you the property with a mortgage and forgive the mortgage at $11,000 each until it is gone. Glad to look after the returns including your mother's estate return for you. Even if the estate is low enough that you do not HAVE TO file it, I recommend you do file when there is property in Canada because it means that the IRS has to deal with it NOW and they can NOT come back seven years from now because they suddenly found out about the Canadian property. Answers to this and other similar questions can be obtained free on Air every Sunday morning. Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Cartier Partners and I will be hosting an INFOMERCIAL but LIVE talk show called "ITS YOUR MONEY" Those outside of the Lower Mainland will be able to listen on the internet at www.600AM.com Local phone calls to (604) 280-0600 - Long distance calls to 1-866-778-0600. Old shows are archived at the site. This from ask an income tax immigration planning and bankruptcy expert consultant guru or preparer from www.centa.com or www.jurock.com or www.featureweb.com. 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Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. -------------- next part -------------- An HTML attachment was scrubbed... URL: http://www.centa.com/CEN-TAPEDE/centapede/attachments/20041014/b4f6abf0/attachment.htm
