# Gift/Inheritance Tax



## Jfinlayiv (Aug 4, 2011)

My Parent-in-laws bought four parcels of land (forested - no dwellings) totaling approximately 400 acres back around 1969. The property was in both parents names. My father-in-law recently passed away. My Mother-in-law has the property listed in her Will to be distributed 50 - 50 to my wife and her brother. 
They have been paying their annual property taxes for the land. The property has no road access to it and is surrounded by other personal property owners and the Queens Land (if I have the term correct). 

1. Is it best for their Mother to sell the property then give them the gains as a gift or to let them receive the property as an inheritance? Gift vs Inheritance tax issue.

2. Anybody know about Canadian Laws permitting access to this type of property through neighboring personal properties or the Queens Land? In the past, 5-7 years ago. We stopped by a neighboring property owner and asked for access to the property via his. He permitted us to use the only dirt road access through his property. Once the dirt road ended we still had to walk in quite a ways before getting to the property. We are not sure if there are laws allowing access to build a home on it?


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## kcowan (Jul 1, 2010)

There is no choice but to pay capital gains on the property when Mom passes. Her estate must settle that before the title passes. This will be done by getting a current appraisal. (BTW the adjacent land is called Crown Land although it has little to do with the Queen.)

As far as gaining access, there is no path to secure that. You could offer to purchase access through the neighbours property but they are not obliged to provide it. The Crown has even less motivation.

(BTW gaining road access will increase the value of the property.)


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## ghostryder (Apr 5, 2009)

Jfinlayiv said:


> 1. Is it best for their Mother to sell the property then give them the gains as a gift or to let them receive the property as an inheritance? Gift vs Inheritance tax issue.



There are no gift or inheritance taxes in Canada.


When your MIL transfers the property to you she will have a deemed disposition and will have a capital gain (or loss) based on the difference between the adjusted cost base of the property and the fair market value of the property.


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## OhGreatGuru (May 24, 2009)

Unless your wife and her brother particularly want the land for either personal use or investment purposes it would be easiest to tell mom to sell the land, pay her capital gains tax, and gift them what's left over.

It will also simplify the eventual administration of her estate.


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## balexis (Apr 4, 2009)

And if you really want the land and are worried you/your MIL estate won't have enough money to pay the capital gains without selling said land, an option is to purchase life insurance for MIL covering the capital gains bill when she passes. Of course this only works if she is insurable.


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