# Selling parents's house in Europe and bringing money to Canada



## HighFive (Mar 23, 2015)

Experts, my friend is in situation where both his parents passed away last year within 5 months time interval..... RIP to them both.
They had a big house in Europe and now his brothers and sisters are thinking of selling it & dividing money in between them....

His portion his is supposed to transfer to Canada, more specifically to Ottawa where he lives.

The question is how much tax he has to pay for bringing this money from Europe to Canada officially and if there is any tax must be paid at all....?

Thanks for your all your advises in advance.


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## heyjude (May 16, 2009)

Good news: Canada does not tax inheritances. Of course, the estate will be liable for taxes in Europe. Your friend's share will be calculated and the estate distributed after European taxes are paid. 

I have personal experience of this exact situation.


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## OhGreatGuru (May 24, 2009)

There is no tax on inheritances, and no tax for transferring the inheritances money to Canada. Under Canadian law, your friend acquired part ownership of his parents' home after their death, valued at the then Fair Market Value. If the value of the property increases before it is sold, then in principle his portion of the increase is subject to capital gains tax. However, if the family sells the property soon, I wouldn't worry about it - just tell CRA it took several months to liquidate the estate, and declare the money received as his inheritance.

But, if the family changes their minds and hangs onto the home, he should make sure he has some documentation of its value at the time he acquired his share for future reference.

PS. in case your friend has not read about FINTRAC, transfers of sums over $10K are reported to FINTRAC for anti-money laundering purposes. The receiving financial institution may have questions about what the money was from before they release it. He should go to his bank before the transfer is made and provide them with a copy of the will or estate papers to show them that it is an inheritance.


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## IFITSTOBEITSUP2ME (Mar 6, 2015)

Forgive my naivety but are you saying that if my hubby and I die there is no limitation to how much our daughter can inherit from liquidating all our assets (stocks, shares, savings, TFSA's, RRSPs, revenue properties etc) and not pay any taxes here in Canada? 

Just in case and we'll likely sell before then but ...... What about if we died and she sold the US property? Whilst she would likely have to pay US taxes I'm assuming, when what is left is exchanged and brought into Canada would she not be taxed on that. We know technically we have to pay USA taxes as well as potentially assessed for Canadian capital gains tax, although advised it'll likely be zero based on what we will already have paid Uncle Sam.

Thanks in advance.


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## heyjude (May 16, 2009)

IFITSTOBEITSUP2ME said:


> Forgive my naivety but are you saying that if my hubby and I die there is no limitation to how much our daughter can inherit from liquidating all our assets (stocks, shares, savings, TFSA's, RRSPs, revenue properties etc) and not pay any taxes here in Canada?
> 
> Just in case and we'll likely sell before then but ...... What about if we died and she sold the US property? Whilst she would likely have to pay US taxes I'm assuming, when what is left is exchanged and brought into Canada would she not be taxed on that. We know technically we have to pay USA taxes as well as potentially assessed for Canadian capital gains tax, although advised it'll likely be zero based on what we will already have paid Uncle Sam.
> 
> Thanks in advance.


Yes and yes.


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## Eclectic12 (Oct 20, 2010)

heyjude said:


> IFITSTOBEITSUP2ME said:
> 
> 
> > Forgive my naivety but are you saying that if my hubby and I die there is no limitation to how much our daughter can inherit from liquidating all our assets (stocks, shares, savings, TFSA's, RRSPs, revenue properties etc) and not pay any taxes here in Canada?
> ...


Based on the wording ... I suspect there may be a mistaken impression that the liquidation of assets after death for a Canadian tax payer is also tax free ... which is not the case. 

The executor(s) liquidate the assets, report the income on the tax return filed after death and pay any income taxes owing. 


The inheritance being paid is with *after tax* dollars to your daughter. The reason why it is usually referred to as "tax free" is that some other countries will charge additional taxes on the inheritance (called inheritance taxes).


Only certain types of things such as buying a life insurance policy and naming your daughter as the beneficiary will avoid being included in the estate and the final income tax being assessed/paid.

Registered accounts have a few exceptions where they can be passed on tax deferred or free but not all accounts as well as not all people.
http://retirehappy.ca/what-happens-your-rrsps-when-die/
http://www.moneysmartsblog.com/esta...ry-successor-holder-tax-free-savings-account/


Cheers

*PS*

The assumption in the responses above to the OP is that since the house is in Europe, the parents are not considered tax residents by Canada and don't have Canadian assets. With the mention of an RRSP and TFSA, I am assuming that you are a tax resident of Canada.


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## OhGreatGuru (May 24, 2009)

Eclectic gave a fuller response. There are no canadian taxes owed by the recipient of an inheritance. But the estate of a Canadian resident is taxed by Canada before money is distributed to beneficiaries. Likely the same for most foreign countries that have estate or capital gains taxes.


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## IFITSTOBEITSUP2ME (Mar 6, 2015)

Thanks for the clarification folks much appreciated.


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## HighFive (Mar 23, 2015)

Thanks very much for all your replies, folks.


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## sags (May 15, 2010)

The only caveat is that if the estate trustee fails to pay the full taxes, the CRA will follow the asset and demand any taxes due from the new owner of the asset.

It is possible that the trustee underestimate the fair market value of the asset and if the asset is later sold the "difference" may be taxable.

If the estate taxes were reassessed at a higher amount than the estate paid and the estate is closed, the CRA will follow the assets to the new owner.

The probate process includes listing all assets at fair market value when probate is opened. 

The probate process includes listing all assets at fair market value for the assets at the time of distribution to beneficiaries, and the personal information of the beneficiaries. 

My wife inherited some farm land in 2014. She has to claim the fair market value for the land when it was transferred into her name, and the fair market value when she sold it months later. The value should be the same and no taxes would be due.

Unfortunately, the estate trustee is reluctant to tell us what he entered as the fair market value for the land when he closed the estate.

He says that he has received the Final Tax Certificate and everything is all right.

Problem is that it might be all right for him............but what if he gave a low fair market value on the estate taxes to avoid a higher estate tax bill ?

The CRA are going to compare the value he listed on the probate papers and the value we give.

I suspect they would come after us for any shortfall in taxes paid.

Fortunately, because it is farmland there are special rollover capital gains exemptions that my wife can claim.

But if it wasn't farmland it could be a problem. Time will tell if the CRA gets back to us.


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## Eclectic12 (Oct 20, 2010)

sags said:


> The only caveat is that if the estate trustee fails to pay the full taxes, the CRA will follow the asset and demand any taxes due from the new owner of the asset.
> 
> It is possible that the trustee underestimate the fair market value of the asset and if the asset is later sold the "difference" may be taxable.


 ... which is why most executors for a Canadian estate that I have talked to will distribute only a token amount or nothing until everything is wrapped up. This includes probate, the tax return and having the sale of the any house/farm/property completed.

The other risk of an estimate of FMV is that if it is sold at a later date, the FMV estimate may be substantially more than the sale price - resulting in the estate paying more capital gains taxes than was necessary. (Plus this likely opens the executor up to legal action if the beneficiaries are upset enough.)


If the executor has no choice ... then getting professional market valuations is a way to migrate the risk.


Regardless ... for the OP where it is implied the parents are UK residents with no Canadian assets, whatever process the UK uses will change the process and may stop the use of a FMV estimate. 


Cheers


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