Capital Gains

Canada Revenue Agency Dept: He died last year and his daughter, Corey, was his executor, according to Winnipeg Free Press. As executor, Corey was responsible for finalizing his taxes. She had no idea how complicated the tax filings would become. The first thing she learned was the change in use, from owner-occupied to rental, was actually a taxable event. The Canada Revenue Agency treats a change in use as if it were a sale, and capital gains would normally be triggered on the house. That was not a problem. Dad had a principal-residence exemption that would be available to shelter the capital gains up to the date he moved out. That exemption would erase any capital gains prior to the time he moved out. It left huge pent-up gains of $2 million for the years that followed, however. The taxes on that would be $400,000. She was not happy and jack inherited a house in British Columbia when he was a young man. It was a lovely old house on a quaint old street and the perfect place to raise a family. Eventually, the children moved out and his wife died. He lived on in the house as a widower, tending the garden each year while growing older. When his health failed in 2003, he moved to Calgary to be with family, and after a few years in a "grampa suite" at his daughter's place, he went into a care home. The house did not sit vacant while he was living outside of British Columbia. It was rented out to tenants and generated rental income. Better, it steadily increased in value. It was worth $1 million when he moved out. Over the first four years it was rented out, it more than doubled in value. By the time he died, eight years after vacating the house, the value had reached $3 million. (www.immigrantscanada.com). As reported in the news.