Re: What does the taxman know?
 

Jonboy
brilliant just the sort of thing I'am looking for. I think there is a tax on this, inheritance tax, I have heard this nasty money grabbing idea is exactly the tax that hits your will as if it isnt bad enough losing some one the are trying to tax you on it! Can anyone shed light on this taxation?

Re: What does the taxman know?
 

Inheritance tax in which country?

Have you looked at the HMRC and CRA websites?

Re: What does the taxman know?
 

There is no inheritance tax in Canada. In the UK it kicks in at UKP300,000. If the house is worth UKP100,000 this is not really a concern.

Re: What does the taxman know?
 

In Canada there is capital gains if applicable on the value at date of death (on a Canadian property, no idea what happens if you have overseas ones too).

Re: What does the taxman know?
 

Confused now. My mother has house that is willed to me. If I am living in Canada when I inherit it will I pay capital gains tax on the whole value of the property.

If she transfered it into my name before we move over (which we have talked about) does that mean I would only pay capital gains tax on the profit since we left the UK.I won't be leaving another house in the UK as a principle residence.

Re: What does the taxman know?
 

Her estate will pay IHT in the UK.

Re: What does the taxman know?
 

It comes under the £300,000 amount for inheritance tax.

Re: What does the taxman know?
 

Okay, I just meant her estate is a UK matter, nothing to do with Canada until it's yours and you get asked about "did you own any overseas property" on your tax return.

What I meant above not knowing about Canadian CGT on foreign property, was what happened if a Canadian resident owned abroad and died. I'm dreaming about my non-existant condo someplace warm ;)

Re: What does the taxman know?
 

Oh right. Different question I guess. maybe someone else will answer it.

Thanks anyway.

Re: What does the taxman know?
 

I've got no money to worry about the taxman getting :( but I have to say this thread has been really informative. It's amazing how much knowledge is available on this forum.

Re: What does the taxman know?
 

There is deemed disposition of all the deceased person's assets on the moment before they die. Any capital gains are taxed with the deceased person's final tax return. Hence there is no inheritance tax.

Tax is tax so I can see that whether it is called income tax or inheritance tax can be a moot point.

The deemed disposition and liability for tax on capital gains applies to all property (except a principle residence) anywhere in the world.

Re: What does the taxman know?
 

No. You are only liable for property you own. When you inherit the house it will be tax free in Canada. The capital gain meter starts ticking at that point.

(For the sake of completeness, in some circumstances you may have a liability for capital gains of property held in a trust of which you are a beneficiary. If this is the case you need professional advice.)

Yes, you would pay tax in Canada on any profit after you move over. If she retains ownership she would have the gain tax free as her principle residence.

If her estate will be below the inheritance tax threshold I can not see any good reason for doing this. It is like volunteering to pay extra tax. Even if the estate is over the threshold, I would imagine HMCR would disregard the transfer of ownership unless she paid you a fair market rent for its use.

Re: What does the taxman know?
 

Yes, the gain on your non-existent condo is taxable, which is a b*gg*r. :)

Re: What does the taxman know?
 

So it would be advisable to value property before arrival in Canada, especially with the current market in the UK, if under 300k then we would be better to use a will and have the inlaws remain the principle residents/owners at this point as we miss inheritance tax.

Re: What does the taxman know?
 

If you own property in the UK it is a very, very, very good idea to get a market valuation before you move to Canada.

On the face of it, yes.