# Dealing with inherited home.



## andy1414 (Aug 30, 2011)

My parents both passed away in 2005 leaving my sister, brother, and myself the owners of the family home. My sister has lived in the home since their passing and wants to stay but now wants to "buy-out" my brother and I. Before going ahead with this, I'm quite concerned about the possible tax problems we may be facing. Has anyone dealt with a similar situation? The title of the home is still in all three of our names. What's the best way to deal with this so that Revenue Canada doesnt take a huge chunk of our $$$?
Thanks


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## iherald (Apr 18, 2009)

andy1414 said:


> My parents both passed away in 2005 leaving my sister, brother, and myself the owners of the family home. My sister has lived in the home since their passing and wants to stay but now wants to "buy-out" my brother and I. Before going ahead with this, I'm quite concerned about the possible tax problems we may be facing. Has anyone dealt with a similar situation? The title of the home is still in all three of our names. What's the best way to deal with this so that Revenue Canada doesnt take a huge chunk of our $$$?
> Thanks


If it's your principal residence, or declared to be, you should be ok. My assumption is that your parents estate were forced to pay taxes on the house at fair market value when they passed it on to the children. If that's the case, then you would only pay capital gains taxes on the amount it has increased since 2005. Obviously the lower the amount you say it was sold for, the lower your taxes.

If you attempted to avoid taxes when your parents passed away, then you're likely screwed and the your cost of 'purchase' will be deemed to be 0, and you'll be paying capital gains taxes on the entire amount you receive.


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## kcowan (Jul 1, 2010)

Since it was their PR, there was no tax paid in 2005. So you need to get FMV for 2005 and FMV for when you change the title, and the difference is subject to capital gains for the two brothers, while sis gets a PR deduction.

Obviously you all want the amount to be the smallest that you can legally get away with. Get an official quote from an appraiser.


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## andy1414 (Aug 30, 2011)

Thanks very much for the replies. We'll now have to dig out the papers from when the house was turned over in '05.


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## OhGreatGuru (May 24, 2009)

And by the way, when Sis buys you out, she needs to keep a record of the transaction and re-calculate her new "deemed acquisition cost" (like an adjusted cost base) If it remains her principal residence until she disposes of it, it won't matter. But if she should change use and it becomes a rental or secondary residince, she will need her adjusted cost base to calculate her eventual capital gains tax liability.


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## Cal (Jun 17, 2009)

And most families will reduce the appraised price of the home 4% or so to reflect a RE agents fees had they sold the home to someone else. You would still get the same share of the equity from the sale, and it is a nice gesture to your sis to save her a few K.


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## Skye (Sep 3, 2011)

*Estate Sale*

Similar question. One sibling stayed in the house prior the death of the parent. Sibling to stay in the house "free" for a couple of years and then will buy out the other siblings. Does the estate pay the taxes at death or death date + 2years when the sale takes place. Can the estate take the PR deduction until the time of sale e.g. death date + 2 years? When the sale is done is it subject to land transfer taxes or any other taxes like a sale to a third party? Thanks


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## KristyW (Sep 7, 2011)

This is what happened to my grandparents' home in Montreal. My aunt ended up buying the home and my father and uncle got their share. I'll have to ask my dad how it worked out.
____________

Kristy - Has anyone ever used http://www.northamerican.com/ to move?


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