Thank you for choosing TurboTax. Money received from an inheritance, like most gifts and life insurance benefits, is not considered taxable income by the Canada Revenue Agency, so you don’t have to pay taxes on that money. Of course, this doesn’t mean that inheritance is immune from Canadian tax laws. The deceased person’s legal representative or estate may have to pay taxes on the estate’s income before the money is released to you.
Non-registered capital assets are considered to have been sold for fair market value immediately prior to death. Any resulting capital gains are 50% taxable and added to all other income of the deceased on their final return where income tax will be calculated at the applicable personal income tax rates. They are taxed at the applicable capital gains tax rates.
Example:
If a cottage was purchased for $200,000 and is now worth $500,000, the capital gain is $300,000 and you would owe taxes on $150,000.
If you need any further clarifications, we would be glad to assist you by having you contact us by phone or via Facebook or Twitter.
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