Be a shame if something were to happen to it.
National Post- Canadian, 93, wanted to give her kids a gift. Instead she got slapped with $40K in capital gains tax bill
The two lots were appraised at $125,000 and $145,000, totalling $270,000, leaving Diachun with a tax bill of about $40,000, an amount she said she cannot pay.
“I’m on pension. How am I going to pay for that?” said Diachun. “I’m not one of the wealthy. I’m 93 years old. Who is going to give me a mortgage? Who is going to give me a loan?”
I agree the whole Canadian tax thing has gotten out of hand but they seem to have left out some information here. I have had appraisals done on my property and I am not charged on the increased value of unrealized gains. The idea of her having to pay tax now before giving over the property is not realistic (unless something changed that I am missing). If this woman is 93 years old she should be considering leaving the property in question to her will to be divided at her wishes.
What is troublesome here is that after you die someone has to file your tax return still and the government is going to take that taxable gain one way or another. We literally tax the dead here. They say there is no tax on inheritance and that is true, however, they do tax the estate which ultimately cuts into the inheritance before it is divided. Honestly, I wouldn’t be mad if our tax dollars went to good use but I have yet to see any of my tax payments go to anything I would agree to if given the option.
It’s not getting the appraisal. It’s transferring it to another person. CRA deems it a sale, therefore taxable.
It’s called a deemed disposition. And just wait…..the feds have always looked at how they can tax the gain in principal residences as well. You can bet that certainly the Liberal/NDP bloodsuckers are trying hard to figure out a way where you will be charged a “taxable benefit” on the increase in value of your home. It is slow motion Marxism.
The CRA is pulling a “Deemed to be sold” and she probably needs a better tax planner.
#Libranos
#Libranos, and the graft.
If only he had bought a #Libranos Party of Canada membership he could have solved so many of these problems.
They could have all gone away.
“The tax was intended to broaden the tax base and tax income from investments similarly to income from labour.”
The problem with treating investment income similar to labour income is investment income was already taxed when it was labour income. The government is punishing you for making money and taxing you twice. Then, when you spend your investment income the government taxes you again – as land transfer tax if you buy property or HST if you purchase goods or services.
Prior to 1971, under what was left of the gold standard, few investors ever made a whole lot from capital gains, such that the state never thought it worth taxing. Once the monetary system was severed from its previous anchor, capital gains soared on real estate and capital assets, bringing it to the immediate attention of the tax man.
More than twice.
Some taxes are obvious, like the income tax, the capital gains tax, the HST, etc.
Some taxes are not, like the corporate tax, or the inflation tax (you know, when the government decides it needs to spend another $80 billion out of thin air this year).
I know people who inherited farmland and never had to pay any capital gains at the time of transfer. But they will pay if the land is sold for more than the lifetime exemption.
Is the issue the fact that the land is going to change from farmland to a personal residence and therefore become completely exempt?
There is (currently) a capital gains tax exemption on farmland. For how long? Who knows with the thieves in Ottawa.
She was severing 2 lots. Hard to see those as farmland.
From the NP story “Liz Diachun told CTV News she was planning to give her family two lots on her farm property in Warkworth to help them establish homes”.
I assume you didn’t bother to read the story, but is it any clearer now?
LOTS ON HER FARM PROPERTY!!!!!
Taxes in Canada are way too high, especially considering how awful our public services perform and how much is given away to corporations and foreign countries. So, I am in no way justifying the level of taxation by Canadian governments. The lady does another option to cover the tax bill and gift her kids the land – get the kids to pay the tax owing. They are getting the land and, assuming they are credit worthy, can use the value of the land as collateral for the loan.
A couple decades ago my grandfather gave my mom and my aunts the majority of his remaining cash assets, as long as they promised not to spend it until after his death and paid his bills (in case he needed the money). I assume it was to circumvent the deemed disposition tax?
Did something similar. My dad gifted me his Saskatoon condo, witnessed and confirmed by his lawyer. I had the property immediately appraised. Dad died two months later. At the time, the Saskatoon market was really bad for sellers of condos, and I eventually sold it for $30,000 less than the appraised value. Ended up with a capital gains credit, which I can use if I ever make too much money on something else.
This type of estate planning probably happens more than people know. As the amount of taxes gets higher and higher more people will look for legal ways to avoid taxes (or move to another country). Watching a sketchy government waste hard earned taxpayer’s money and then ask the taxpayer’s for more money makes people less inclined to be generous and patriotic.
Given that all tax is theft, any discussion over the details is fraught with opinion. That people invest in assets with after tax income means that in most cases, capital gains is double taxation. Canada is no longer competitive for investing as the capital gains rate in the US is a flat 15%. Generally you tax things you want less of and investment risk taking certainly fits the bill as capital flight from Trudeau’s Canada is already full-on.
Given that this regime is desperate and into full-on Marxist legislation, the only question that needs to be asked is will the Conservatives commit to reverse it or better still eliminate it like Conservatives fifty years ago promised.
The only way to reduce taxation in Canada is to reduce the size, scope and thus cost of government. Sadly, the wretched spawn of the pig has borrowed to pay for government and tripled the national debt. Even with a massively reduced government, we still have to pay for the old one that wasn’t.
Given that Canadians are cowards and weak, and need mommy government to make life’s hard choices, this is all just theory in any case. We are circling the drain, will go down, and T.G. End this joke.
Maybe we try the doctrine of Odious Debts?
When Alberta separates, will we still be stuck with Capital Gains taxes?
Am a little confused as people are making the claim of capital gains as double taxation. Capital gains is the tax on the realized gain from the sale of investments… You put in $100 and you got out $150, $50 is the taxable portion although with capital gain (before this latest change) only $25 would be taxed at the current income tax rate. So the tax isn’t on the after tax income that you invested with in the first place.
In any event, we are all getting taxed to death and I will only have faith in the Conservatives if they eliminate the CG tax and reduce the income tax. So far I don’t have much belief that they will cut anything, including government jobs, as too many people will cry about that causing an additional crisis. I am begging the Conservatives to prove my gut instincts wrong.
Lets assume you made $43504 this year, and you wanted to invest $100 in something you expect to get a capital gain on. To invest that $100, you need to earn $125.08.
It gets worse from there.
It also doesn’t take into account that we have a government spending way outside it’s means, and inflating the currency at the same time.
Someone wake me if Poilievre ever gets around to discussing massive tax reform.
Or immigration.
Or the Indian Act.
Or the Firearms Act.
Or the Paris climate accords.
What would happen if you severed the two lots, kept them in your name, added each grandchild onto the title, and then died (hopefully not for a long time).
The alternative would be to sever and sell, pay the tax, then giving each grandchild a cash gift.
Grandkids can each pay her $20,000 and they get a very inexpensive lot.
Steve,
I am sure that the tax blood suckers have considered that scenario and would consider that adding a name to the title to be a deemed disposition and capital gains would be required to be paid. There is some convoluted stuff about sales of a farm property but I doubt that severance of a residential lot would fall under that category. My biggest criticism of capital gains taxes is that they do not allow for inflation. Some property value increases over a long period of time might look substantial but when adjusted for inflation would be paltry.
The government creates inflation and then taxes it. One can be no better off and owe a crap load of taxes. People should add 100% of the gain to taxable income but get to deduct the fictional portion caused by inflation using the consumer price index.
Sell each lot to the grandkids for one dollar.
Eskimo – seriously would not work. We’re looking at a “non-arms-length” transaction, for which there are special rules in the ITA. Essentially, disposal of these two lots would be held to be at “fair market value” which means she’s still on the hook for the difference between the ACB and the FMV.
Have done taxes publically for over 30 years. Have had to explain this to many clients, including the one who had just handed over some shares to an offspring. Said shares had been part of a funky IPO here in Alberta, but was able to figure out an ACB and explain to the donor how this worked.
Sign the deeds over to the kids let them pay the taxes.