Tax Implications of Selling or Gifting Your Cottage to a Family Member Watch Video
Allan Madan, CPA, CA
Before being overly generous, consider the tax implications of selling or gifting your cottage to family. Read More…
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The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CPA, CA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
We are Canadian planing to gift our condo in San Diego to our grandson, US resident. The condo appreciated in value about $100.000 ..We rented condo every year for several months and we did reported income to US and Canada..We never claim depreciation on property. What are tax implication to us and to our grandson who is US resident?
Hi Mirjana,
For Canadian tax purposes, there will be a deemed sale when you give the property to your grandson by way of a gift. The deemed selling price is equal to the fair market value of the property on the date of the gift. As a result, a capital gain will be triggered and one half of the capital gain will be included in your income in the year that the gift is made. Based on the information provided, the taxable capital gain is equal to $50,000 ($100,000 x 1/2).
For US tax purposes, you will not pay capital gains tax when the gift is made. In addition, the cost amount to your grandson of the condo will remain the same (original purchase price). Your grandson will pay capital gains tax to the IRS when he sells the condo.