# Capital Gains Tax on Inherited Farmland



## MacGuffin (Apr 5, 2015)

I inherited some farmland over 25 years ago, and I am thinking of selling it soon. As part of my analysis of whether to sell or not, I would like to get a fairly accurate idea of what capital gains tax would be payable on the proceeds of the sale.

How do the tax authorities determine what the value of the land was 25 years ago? Remember, I inherited it; I didn't pay for it. Was the land's fair value recorded somewhere at the time of the transfer of title? Would that information be recorded by the provincial Land Titles Office? 

If the fair value of the land was not recorded at the time, then how is it determined now, 25 years later?


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## OhGreatGuru (May 24, 2009)

Theoretically there should have been some valuation done when the estate was settled 25 years ago. Try searching out who was involved in handling the estate; or anyone else who may have the original estate file. Because the property should have been assessed for potential capital gains to the estate 25 years ago.

But practically, these things were often handled sloppily in the past (and still are sometimes). It's possible it was not dealt with properly. In a way it is also your fault, because when you receive such a real estate gift, you should ask for, or obtain, an appraisal for future reference.

You can try archival information on tax assessments; but if the transfer pre-dated market value assessments they won't help.

You can try a local assessor or real estate to see if they will give you an appraisal for what it's market value would have been, but that's a long way to go back for most companies with any reliability.

If you can't come up with something to support a "deemed acquisition cost", CRA will assume it was 0. The onus is on you to prove otherwise.


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## AltaRed (Jun 8, 2009)

OhGreatGuru said:


> Theoretically there should have been some valuation done when the estate was settled 25 years ago. Try searching out who was involved in handling the estate; or anyone else who may have the original estate file. Because the property should have been assessed for potential capital gains to the estate 25 years ago.


The estate's final tax return should have had a deemed disposition based on the date of death. Tax accountants know about this sort of thing. When my Dad passed away in 1993 and left me some farm land, that is how it was handled. I don't believe the title transfer showed that value. Then when I eventually sold it in 2013, all I had to do was use the deemed disposition value for my ACB (+ capital improvements that is).


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## tygrus (Mar 13, 2012)

If you can find a way to operate the farm as an active business and your primary source of income, then you can access 800k tax free capital gains from the sale and another 800k for your spouse. If your could find a neighbor to custom farm it for you for a few years that would do it. Better check with an ag accountant.


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