Inherited house and sold house

In Canada there is no inheritance tax, so you likely will not have to report the portion of the sale proceeds. Only if the property sold for a higher value than when you inherited would you realize a "Capital Gain", and have to report this on your tax return.

For example, if the property was valued at $300,000 when you inherited it, and it sold for $360,000, there would be a $60,000 Capital Gain on that property. You would have to report $20,000 on your return as a Capital Gain and would have to pay tax on 50% of that gain.

As per Canada Revenue Agency (CRA) Generally, when you inherit property, the property's cost to you is equal to the deemed proceeds of disposition for the deceased person. Usually, this amount is the FMV of the property right before the person's death.

If the house you sold was also your principal residence, you will have to complete Schedule 3 and report the proceeds in the Income section of TurboTax.  Please follow these steps to report this sale in TurboTax Online:

1. Select Find and enter principal
2. Select Principal Residences from the search results, then select Go
3. On the Sale of your Principal Residence step, select the Sale of principal residence checkbox, then Continue
4. Enter information related to the sale in the appropriate fields, then select Continue
5. On the Disposition to a spouse or partner step, answer the question(s), then select Continue
6. On the Designation of a property as a Principal Residence step, fill out the fields, then select Continue
7. On the Sale of Principal Residence Summary step, select Continue.

For more information, please see our TurboTax article, Reporting the Sale of your Principal Residence. 

Canada Inheritance Tax Laws and Information.

and Our FAQ, How do you Report the Sale of the Principal Residence? 

 

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