Getting a head start on final t1 and t3 for family member who passed away feb 2022
On the final t1 the only income is 2 months of pension and cpp payments. As well as a 65k capital gain for deemed disposition 25% family cottage. Cottage was transfered into other joint tensnts name right after death. Also reporting deemed disposition of principal residence. No cash stocks or anything else to report
For the t3 Im a bit confused. The principal residence was sold 2 months after death and value didnt change from the deemed disposition on the t1. So do i claim outlays and expenses for the real estate commosion and lawyer fees? This will give the estate a loss of 20k. Can i then use the election 164(6) to carry that loss to the final t1? The house was vacant after death and sold shortly after. What about the cpp death benifit? Should it be included on the t3?
Thanks
Edit: also am i supposed to include anything with these final returns other than normal tax documents? Im already the executor and authorized representative with the cra. Do I need to send death certificate, letters of administration, list of assests or benificary
Yes, you must upload death certificate and will to cra which proves you are the executor. Then if a diff Auth Rep is needed as in the accounting firm the appropriate forms must be completed.
You also need to apply for a trust account number
Death benefit is either taxable to the estate on t3 or to the human whom received and cashed it. What it was spent on is not relevant.
If claim PRE on house then you cannot deduct costs.
Suggest you prepare a scenario of pre on cottage and cap gains on house to evaluate which is better for taxpayer.
Ok thanks Ill look into using the cottage for the pre. If i use the cottage for the pre then am i able to claim selling expenses for the house on the t3 and carry the losses back to the t1? What kinda of expenses can i claim? Real estate. Lawyer. Mortgage interest and discharge fee. Home insurance. Hydro and water?
A loss on the cottage could be deemed to be zero if it is a personal-use property. I believe CRA’s view on this is that it depends on whether the cottage has been used after the date of death by beneficiaries or anyone related to them.
You can deduct selling expenses in determining the capital gain/loss on sale (real estate commission and legal fees/disbursements). The mortgage interest and operating costs of the cottage would not be deductible in determining the gain or loss.
Also note that 164(6) can only be used if the capital loss was realized in the first TAX year after the date of death.