Asked
I know you don't need to claim an inheritance on your taxes. But is that just a cash inheritance? My husband inherited farm land in Alberta, after the will went through probate, the land was transferred into his name and it was immediately sold to the farmers renting it. Do we have to claim the sale or the land or does it all fall under inheritance and nothing needs to be done regarding it on our taxes?
Clint’s answer
If the land was transferred after probate and before sale, yes, you are obliged to report the sale on your taxes. You may have a small gain or loss that would have tax effect. If there is no loss or gain, they will still want to know about it. (How would they know if you haven't reported it?). This is the logic behind it. Reporting income, losses, and transactions are done with a signature indicates that what you are saying is kind of like the truth, the whole truth, and nothing but the truth. Simply leaving things out of tax reporting because we feel there is no tax effect is a very subjective thing that would depend on what we knew and didn't know about the tax system, and the CRA is reasonable to not allow the vast array of interpretations to be included in our tax reporting when it comes to real estate and many other financial transactions.
If the property was sold prior to the estate delivering your proceeds, the estate would and should have reported the sale along with the gain or loss.
Does this help?
February 13, 2024
From Ask Clint: real questions from a Canadian public finance forum, answered by Clint Cole. Names are changed. This is general information, not advice for your situation, and rules and dollar figures may have changed since Clint answered. Terms