Parents transfered house to me, how bad is captiol gain tax if I sell? is there a way to avoid being taxed?
My parents transfered ownership of their house to me. I just got married last year and I’m renting out a place in a different location while my parents are still living in the house they transfered to me. 5 Years down the road I’m planning to sell the house. How bad is the capital gains tax and is there any way I could avoid it? Asume the house is worth $500,000 when the house is being sold.
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March 28th, 2010 at 5:24 pm
They tax you when you tranfer the deed. You will also get taxed on the gift tax. Your parents can only give you $10k. Above which there is a gift tax.
March 29th, 2010 at 12:11 am
Tony’s answer is based on US, not Canadian tax statute.
If you live in the house for a year it will count as your principal residence and if you then sell it the capital gain will be tax-free.
April 1st, 2010 at 10:24 am
When they transferred it to you, it started the clock, so to speak. You should have had an assessment done at the time to determine the value. If you sell it, you will pay tax on any increase in value since you received it.
As Charles points out, it becomes your residence (no longer subject to tax) when you live in it for a year, but you are liable for tax on the increase before that time.