Joel DyckReal Broker SK Ltd.
Saskatoon · From the topic map

Do I pay capital gains tax when I sell a house I inherited?

You do not pay capital gains tax on inheriting a house, but you may owe it later on any gain between the date of death and the date you sell. The Canada Revenue Agency treats the deceased as having disposed of the property at fair market value on the date of death, which sets your cost base.

If the house was the deceased's principal residence right up to death, the principal residence exemption can shelter the gain up to that date, though this is a decision usually made with an accountant since it interacts with any other properties the estate or beneficiaries hold, and getting it wrong, or filing late, can add CRA penalties of 5 percent of the balance owing plus 1 percent for each month it stays outstanding.

If it was not sheltered as a principal residence, for example a rental or a cottage, only 50 percent of the capital gain is taxable and added to the beneficiary's or estate's income for the year, taxed at their marginal rate rather than at a flat rate the way some other jurisdictions apply.

None of this changes what the house is actually worth today, which is a separate question from the tax calculation. Joel Dyck's hand-reviewed valuation gives the estate and its accountant a defensible number to work from, built on comparable sales rather than a rough guess.

Get your hand-reviewed valuation from Joel Dyck.

Still have a question?

Ask Joel directly. No form, no obligation, and a real answer even when the answer is that now is not the time to sell.