Sorry I missed that. But from a tax perspective I think I would still report the income on the wife’s return after death.
But @lokki makes a good point about the new reporting rules for trusts. Not sure if we will be forced to file T3s for everyone whose paperwork is not locked down the day after death? I haven’t yet dug through the new T3 guidance on how it affects graduated rate estates.
I know CRA has already commented on deceased persons and the new UHT return. They are NOT considered trusts for this purpose but still Canadian citizens and thus excluded owners.
I agree that on the terminal tax return, no matter whether the rental property is owned solely by the husband, or jointly owned with the wife under “joint tenancy” or “tenant in common”, there is no deemed disposition to be reported on the terminal tax return capital gain schedule and the wife simply assume the ACB of the deceased husband.
However, if the husband owns the rental property solely or under tenant in common, the rental property will become his estate, probate is required and T3 Trust Return is required after Dec 31, 2023.
If the rental property is owned under joint tenancy, no probate, not part of the estate, no T3 trust return is required.
I have a couple of questions, it may be silly questions but I would like to know that I’m following procedures correctly.
If a couple were to own a principal residence and one of the spouse’s had passed away, do you report PRE on the deceased spouse’s return or is this not relevant due to spousal rollover.
Another question which I’m curious is, if a couple were to own 2 properties, both considered as joint ownership, one was their principal residence and the other was their vacationing residence (cottage). The cottage does not get rented out. On the deceased spouse’s return, I would assume that they would have to pay capital gains on the cottage property.
I have no expertise with handling a T3 estate return, due to complexity and legal issues being a primary concern, but if a deceased client were only collecting pensions, I prepare their final return.
The Canada Revenue Agency clarified a few years back they did not require the deceased spouse to report the disposition of their principal residence if there was a surviving spouse on title.
Negative.
Subsection 70(6) contains provisions for the rollover of the deceased’s assets to a surviving spouse at the deceased’s cost base. This election is automatic.
The deceased can opt out of having the provisions of subsection 70(6) apply if it is decided to be in their best interest to report capital gains on the terminal return.
I agree with @snoplowguy guy. The rollover is automatic and no deemed disposition reported. The one thing I would add is that if you want to elect to opt out of the rollover, you can do so on a property by property basis. Which helps a little bit. When my dad passed, he had a large capital loss carryforward that he couldn’t use so I elected to have some of his investments deemed disposed of to use the loss.