do I have to pay capital gains tax on sale of my mothers house after her death?

Answer 1

Hello,

At the time of your mothers death there was what is called a "deemed disposition" on her home. Assuming that it was her principal residence then there is no capital gain on the deemed disposition.

The deemed disposition results in a new Adjusted Cost Base on the house, equal to the Fair Market Value of the home at the time of the deemed disposition.

If the house was held in an estate or by the beneficiaries for any length of time it's possible that the value of the home appreciated from the time of the deemed disposition to the time of the actual sale. In that case there would be capital gains on the sale and the associated taxes.

Generally speaking, if the house was sold within a coupld of months of the date of death then don't worry about capital gains. If held for more then 6 months then you would need to determine an approximate Fair Market Value at the date of death and compare that to the final selling price. Usually you can get away with using the property tax assessment value plus 5% as the estimated Fair Market Value.

Hope that helps.

Answer 2

Guide T4037 Capital Gains

Answer 3

Ontario CGA is basically correct but he has forgotten an exception. If your mother was using any portion of her house for a business or rental income, the part used may be classified as a capital property. If there was a difference between the adjusted cost at the time the business/e rental income started and the fair market value at the time of death a capital gain would accrue to the Estate and you as a beneficiary would be responsible for paying it. If this is the case call an accountant or CRA.

Answer 4

According to CRA:

Disposing of your principal residence
When you sell your home or when you are considered to have sold it, usually you do not have to report the sale on your return and you do not have to pay tax on any gain from the sale. This is the case if the home was your principal residence for every year you owned it.

If your home was not your principal residence for every year that you owned it, you have to report the part of the capital gain on the property that relates to the years for which you did not designate the property as your principal residence. To do this, complete Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust). If you are the legal representative for a deceased person, you can designate a property using the form T1255.

Note
Because your home is considered personal-use property, if you have a loss at the time you sell or are considered to have sold your home, you are not allowed to claim the loss.

If only a part of your home qualifies as your principal residence and you used the other part to earn or produce income, you have to split the selling price and the adjusted cost base between the part you used for your principal residence and the part you used for other purposes (for example, rental or business). You can do this by using square metres or the number of rooms, as long as the split is reasonable.

See Did you file Form T664? if you filed a capital gains election on the property you disposed of. If you did file Form T664 you will need to complete the T2091(IND)- WS - Principal residence worksheet.

Note

You only have to complete the T2091(IND)-WS if you want to claim a capital gains reduction due to a capital gains election.

Completing your Schedule 3
Report only the gain on the part you used to produce income. For how to report the gain see Real estate, depreciable property, and other properties. You will also find an example showing how to report the capital gain on a disposition of land and building for a principal residence partly used for earning income.

Forms and publications
Capital Gains guide (T4037)
Rental Income guide (T4036)
Form T1255, Designation of a Property as a Principal Residence by the Legal Representative of a Deceased Individual
Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust)
Form T2091(IND)-WS, Principal residence worksheet
IT120, Principal Residence

http://www.cra-arc.gc.ca/tax/individuals/topics/income-tax/return/completing/reporting-income/lines101-170/127/residence/disposing/menu-e.html

If you would like to contact CRA directly on this matter, you can call 1-800-959-8281 and they would be able to provide you with further details.

Hope this helps you.

Answer 5

If the value of the house went up between August when your mom died, and Sept when you sold it, you and your sisters would have capital gains of the appreciation in that month and owe tax on it. Otherwise no. It's unlikely it went up much if at all in that short a time, so you probably don't owe any cg tax on it.

Answer 6

The simple answer:

Generally, in the U.S., you would only owe taxes if you sold the house for more than what the house was worth on the day you inherited it.

Example:

$500,000 Your Selling Price
-$500,000 Value at Mother's Death
=$0 Capital Gain.

Answer 7

if it is your mother principal residence, no need to pay capital gain tax.
after deceased, file your mother income tax return. along with other investments, it will be considered as your mother estate. you can inherited this estate tax free.

Answer 8

I do not know the capital gain taxing system of your Country. But in India, it has been divided in to two types1. short term 2. long term. But one thing, your Mother is still alive,and you are expecting her house becomes yours, and immediately wants to sell it, and get cash..........how come ?