New situation for me…
Taxpayer died, will states life interest in house to Son A, he is to pay for all taxes, insurance, day to day running, repairs, etc… until he dies or abandon’s… it will then be divided by the 4 children.
On Deceased tax return, do I record deemed sale at time of death? and then I presume a T3 going forward until such time as the property actually sells?
If the person who died owned a principal residence, some or all of the capital gain on that principal residence may be exempt from tax. Even where the entire gain is exempted by a principal residence designation, you must still designate the property as a principal residence in the Final Return by completing both:
For more information on the reporting requirements when there is a disposition of a principal residence, see Chapter 6 of Guide T4037, Capital Gains, and Income Tax Folio S1-F3-C2, Principal Residence.
ALL property is deemed sold on date of death (with few exceptions). So, yes - no matter whether it was his principal residence or another property he owned, it should be reported as a disposition.
Thanks all…end of tax season brain and of course, caught my little guy’s cold
Speaking as someone who is NOT a lawyer but has been involved (on both sides) of a “life interest” on title, I don’t believe there would have to be a T3 return involved (maybe a bare trust if that gets reinstated)?
If Son A got a life interest, then the 4 kids presumably got the “remainder in fee” and those kids OWN it now (I’m assuming they are young adults). Catch is that although they own it, they cannot sell or encumber the house without Son A’s consent as long as he is alive (of course).
Actually the will states that the executor (son b)can encumbered the house…which I found odd…but the will has a lot of unique parts:)
Also… the adult children in question are all well over 50.
Son A is not as financially secure and stable in his life as the remaining siblings
Originally he was going to sell but has changed his mind… he is not my client…only the executor is
That sounds interesting…(I had assumed the 4 kids were a subsequent generation)