The passing of a loved one is a difficult time. Unfortunately, this time can become even more confusing and overwhelming when you inherit a house from the deceased individual. If you are given a house in a will, what does this mean for you? What are the steps you need to take? Are there specific taxes you need to pay?
Here’s what you need to know when you inherit a house from a will.
How the Estate is Divided
One benefit of inheriting a home in Canada is that you do not have to pay any inheritance taxes or fees. This means you do not have to pay any money to make the property your own. You also do not have to pay any fees to transfer the name of the property into your own name. However, when you inherit a house, the responsibility of the property becomes your own. This means that you are responsible for all the repairs and maintenance on the property, all future taxes, insurance premiums, and the potential debt on the home.
What If I Wish to Sell the House?
Just because you inherit the home does not mean you must keep it. Selling the house is an option if you don’t have the time or energy to care for the house or you just don’t need the extra space. Although, if you do wish to sell the inherited home, you will be charged a capital gains tax. This is a tax on the market value of the home. You will be taxed from when you first inherited the house until you decided to sell. Be prepared to pay 50% of this value at the time of the sale. If you wish to pay very little of this tax, you will want to sell the home very quickly after inheriting it.
You may not be required to pay this tax if you choose to live in the home and use it as your primary residence for some time. If you choose to keep the home and rent it out to make an additional income, you may be taxed on this income as you are making money on the property.
If you are going through the difficult time of splitting up an estate or considering selling it click here to see how Knowledge Broker can help you through this time. With patience, respect and honestly we will be able to find the best solution for you and your family.
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