Capital Gains and Your Estate

We have clients call our office all the time asking “I hear everyone talking about Capital Gains. What is it and what happens when I die?

A capital gain is the increase in value of your capital property. Capital property is an investment or other asset that produces income, or an asset that if sold would produce a profit for you. The federal government currently taxes Capital Gains by you declaring 50% of the gain (profit) as income on your tax return. For example, if you purchased a revenue property for $100,000 but it’s value is $320,000 at the time of your death, your profit would be $220,000. Your estate would have to declare a Capital Gain and pay tax on 50% ($110,000).

In Canada, the Income Tax Act, acts as if you sold all of your capital properties at fair market value immediately before your death. This means your estate will still own all the property, but it will be taxed as if you had sold it all. Your executor will file a final tax return when you die and your estate will be responsible for paying all the tax that is due.

Questions? Call our office at 780-458-8228 for a free consultation on creating your estate plan. We are here to help!

Written by Stacy Maurier