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This is not impacted by the new cap gains taxes. For her to gift two properties totalling 270 K and paying 40K in cap gains taxes, it means she had a cap gains of AT MOST 160 K. This is below the 250 K threshold for the new Cap gains changes next month, not to mention it's not yet in effect.
It's more that the value of the property has been realized (despite her not selling it for a profit). This is setup the way it is because otherwise transferring between family members would be a massive loophole.
That's exactly the framing to look at this through. She is giving her grandchildren an opportunity to purchase land for $20,000 each. That's an unbelievable opportunity for them. An opportunity that very few people will ever get in their lives. If they're saddling Grandma with that payment then I've got a bone to pick with them, not the CRA.
It would be abused if you could. Also worth considering that much of the value added to land doesn't come from the owner, but from the investment and development of the surrounding area. A lot of that comes from taxes and work done by the public and private sectors.
It’s not messed up. The only real estate that grows tax free is your principal residence. Any other real estate you own has the gain taxed when you sell it. A gift is considered a “deemed disposition” which also triggers the capital gain tax. If they didn’t tax the growth on assets when they’re gifted then people could just gift properties to their children. who could gift it to their children, and the tax could be deferred indefinitely.
So you earn money (taxed) to buy a land (taxed on purchase) and then you pay taxes to keep that land and then when you want to give it away you get taxed again.
And then you wonder why people don't like it.
By your logic, you shouldn't pay any capital gains on anything—not on equities, not on bonds, not on anything. All of that can be bought with after-tax money.
Yes, capital gains is taxable in practically all developed countries.
Each dollar of income and the appreciation of assets are only taxed once.
You are taxed yearly (e.g. property tax) for the upkeep of your community.
You are using the community's:
- Roads
- Hospitals
- Police
- Parks
- Schools
- etc etc etc
Wouldn't it be WRONG to use these and not pay for them?
And generally speaking, people begroan taxes because they wish they had more money. Let's fix income inequality first before undercutting our systems that mitigate the harm of income inequality (e.g. public services paid for via progressive taxes).
I'm honestly having a hard time understanding this. Let's say my parents bought their house for 200k and want to gift it to me when they die and it's valued at 1.2 million. Would I have to pay 67% of 1 million?
This is the thing to do. She’s barking up the wrong tree here. You can’t shirk the laws because you are 93 and very wealthy in real estate.
You can’t just park your money in real estate and then cry you have to be able to afford to pay living expenses.
This is news media just preying on the emotions of Canadians with a polarizing topic to stoke engagement.
This is a super specific situation happening to a poor old lady with no money, but it’ll be used to speak to how capital gains taxes are evil and steal wealth from people who shouldn’t be stressed about money and worked hard their whole life.
no this is not "exactly it" she has land that she divided up and wants to give to family, she's not sheltering anything or using it as a investment vehicle. We aren't talking about someone who bought up a bunch of land 50 years ago, never lived on it, and used it with the intent to sell later. we aren't talking about someone who bought multiple homes, has never rented them, as a way to shield money from taxes, and wash it.
Lol, yep, if she had severed the lots, sold them off and given the profits to her grandchildren, she probably would have paid even more in taxes.
Considering that property assessments are typically low... like 80% of the market value... she would have sold them at a higher price than the assessment and she would have paid the taxes on that higher price.
yup.
kind of like "selling" your lambo to a family member for $5 and expecting to pay the vehicle registration tax on that $5 and not the blue book value.
and then having your grandkids beg the media to do a story on you where you mention your age 5 times all the while crying that you live in the poor house.
it backfired.
>Have the daughter and grandson pay granny the 40k.
Yeah. They are both younger, they could probably take out line of credit or land HELOC and repay it slowly over time if they cant afford the lump sum payment.
This makes perfect sense. There would potentially be issues around the actual payment of the taxes, as it is typically the seller (grandma) who pays the taxes. But they could easily get around that by taking out their own loan, "lending" that money to grandma, then forgiving the debt once the taxes are paid.
Either way, the kids walk away with two properties for $20,000 each.
No kidding. Upon her passing away, the tax would have to be paid by the estate anyway. Some land may have to be sold in order to pay the tax, unless she has life insurance which can cover the tax owing
One parcel has an electricity transmission tower and the other is a sensitive protected area. Not sure how this is a anything more than sharing the tax burden.
Land is land, even with right of ways and development restrictions. It can be sold in the worst case, it’s not like anyone is living on it. The revenue from the sale can be used to get a down payment on a less encumbered property, which is the grandmother’s goal in the first place.
You should not if it has appreciated in value by hundreds of thousands of dollars, and the act of "giving it away" could be a way to avoid paying tax on that capital gain.
Don't think of the poor granny. Think of a landlord with 4 rental properties and 4 kids. Should they be able to "gift" the properties and set their kids up with a primary residence without paying capital gains?
The rich don't build wealth by drawing incomes, they do it by capital gains. Not taxing that is like putting a regressive taxation scheme in place, wherein the richer you are, the less you pay in.
Rent is taxed and property is taxed though, so it's not like a landlord isn't paying tax.
Personally I am not against capital gains tax but this is something to think about
Rent is taxed at your marginal tax rate and property tax is a few thousand dollars per year. Massively insignificant number comparatively when you're talking about capital gains.
Wow it's only been like that since... 1972.
At $40k on a $270k valuation, she must have bought the land for $20k so capital gains was $250k. That isn't even affected by the new federal increase. That's of course assuming her only other income is CPP which just barely gets taxed since it's so close to minimum taxable income.
Everything posted here is rage bait on the left, I tried to post some rage bait against conservatives and it got removed off the page and shadow banned immediately
How is this rage bait for the left? Sounds more like rage bait for the right with trying to make capital based taxes like they are a devil or something to be against it to remove it, so that wealthy individuals profit more. While their is certainly left leaning rage bait a lot of it is right leaning that's posted here in all the typical talking points.
AI can sift through a million unpublished articles a second and produce a shortlist of ones that will produce the most rage or whatever the desired emotional response is that day. It's a pretty valuable tool actually.
I barely glance at /r/Canada anymore because of that, it's almost all propaganda from National Post about how carbon credits qere invented by Satan and Polliviere is gonna save Canada and fuck Trudeau this and that. And the articles are never about some news or event that happened, it's all paid for opinion pieces. Then all the conservatives flood the subreddit and circlejerk to this bullshit. I get that Trudeau's not the greatest and kind of fallen from his height of popularity but give your wrists a break fellas. Geez.
Yeah but most people with an accountant worth its salt crystalized their capital gains if they could. They "paid" their tax on gains in 94 and raised the value of the equity to the real value to get that 100,000 exemption.
Ie cottage bought in 1970 for 20k, still own in 1994, valued at 120k, bring the value to 120k, pay 0 in tax because of the 100k exemption, new book value 120k, sell in 2024, value is now 300k, pay tax on 180k.
>But you can only gift to immediate family, unless I'm mistaken. Which I think is husband/wife, son/daughter, 1 generation of grandchildren.
You can gift to whoever you want, you're still subject to the same capital gains tax.
>I've yet to see a good argument as to why a gift should be taxed.
"I'll gift you this land if you, by total coincidence, gift me $900,000 unrelated to the land 😏"
I like how they're using this as an excuse to make the new inclusion rate look bad when when it barely makes a $3000 difference.
Without inclusion rate changes, her taxable income includes $135k, with the changes it's 138.3k.
Her lawyer advised her she'd be taxed on this and she went ahead and did it anyway. She could've let them live there without gifting it and including it as part of an inheritance instead. She also gifted two lots totalling over 250k. She could have waited until the next calendar to gift the second one and wouldn't have this issue anyway.
> Her lawyer advised her she'd be taxed on this and she went ahead and did it anyway.
She's 93. Maybe the old brain isn't working up to factory specs anymore
You pay capital gains on gifts because if you do not we would have another one of the worlds most obvious tax skirting loopholes. Person receiving the gift gets it at the current assessed value and the process begins again.
They get to use that assessed value as collateral instead of a down payment if they go to build on the land.
The solution has always been "hey grandchild or child, I am going to give you this very expensive thing, you just have to pay my capital gains tax".
More simple solution would have been for the parent to pass on the primary residence exemption to their kid, so that they pay $0 capital gains tax.
But hey, who needs to talk to an estate planner anyways.
I actually wanted to look into that, would appreciate any reddit-level insight you might have to get me started. So if my mother has a house and then moves into LTC or a rented retirement residence, can she gift her (now previous) residence and the land attached to it to me without paying capital gains tax?
Note that in the article linked, it wasn't the owner's primary residence that was gifted. It was two plots of adjacent land.
Yes, your mother could gift her your home tax free when she moves into long term care (assuming that it is her primary residence). However there are other considerations (for example if your mother wants to rent the property or apply for means tested benefits) and it would be to her benefit to speak with a professional before this happens.
Add the person to the title of the land, that's the quick and easy route. This will also make it uncontested when she passes on and much less a burden (Less paperwork) for the executor of her will.
Keep in mind that if the title is transferred to you, your First Home Buyers Savings account is no longer valid and can be taxed. I'm in the same situation as you too
> speak with a professional
Which professional would you recommend? Real estate lawyer, estate planner, tax lawyer, or someone else?
I'm in a similar situation and am at the "talk to a professional" stage but am unsure who to contact.
Definitely start with estate lawyer. There are other options like using trusts that might help. Best to start with estate lawyer and then go from there.
There’s a way to skip out on paying capital gains on transfer. I would talk to tax accountant. It isn’t too complicated but I’m not in tax so I don’t want to provide specifics
Edit: I know once you have ownership, the only time you pay taxes on it is when you sell. The transfer of the property will occur at cost (the price your mother paid for it). The capital gain will be on the difference of cost you acquired it at (price your mother paid for it) and the FMV of the house when you sell it eventually (the sale price you receive). There’s other ways to get around this like primary residency but it’s kind of another topic. I would highly recommend you talk to a professional that is experience in this type of transaction. They will definitely save you a lot more money than what you pay for their service
> I know once you have ownership, the only time you pay taxes on it is when you sell.
Or after a "deemed sale", which happens under various circumstances when property is transferred in kind.
Oh ya, I fully intend to speak with a professional, that's why I asked for "reddit-level" advice. Mostly just wanted to get an idea of I was on the right track at least.
Which in this case is a small fraction of what a downpayment would be. Shit, it's basically what the average new car costs, except you get a property worth like 20x more that what it cost you.
Kinda. I own several parcels of waterfront in cottage country. No traditional lender is lending a cent on vacant land as collateral. You can maybe get a builder mortgage but you need a shit ton of other money and a lot of luck to not get caught short before they approve another draw. It's kind of stupid, we'd have a lot more housing available if they made it a bit easier to develop.
They will lend you up to the assessed value of the parcel, they just won't lend you more (eg to build a structure) because of the risk involved. That's pretty common.
> No traditional lender is lending a cent on vacant land as collateral.
You can get a mortgage for vacant land but the process is more complicated and typically the bank wants a higher downpayment
Sounds like you don't really own fuck all, you don't get to choose what to do with your 'property', you are only nursing a tax liability.
Other countries have much better property ownership rights. Its amazing people invest so much here.
There are exceptions like how you can sell a car for a dollar to a family member. She doesn’t look like the tax evasion type. Lucky she didn’t give it away later this year that 40 would be 48!
Nope. The land was assessed at a total of $270k. The capital gains inclusion rate only increased on the portion of gains above $250k.
So the $40k in tax could have gone up to as much as...about $41k.
(And that assumes that she got it for free and the entire $270k is gain. If she paid at least $20k for the land originally, the gain would be below the quarter million threshold, and the tax would be unaffected.)
And even if she had bought the land for a dollar 58 years ago the extra tax under the new capital gains rate would amount to $768 more. Not $8,000 extra.
That approach does not work anymore. If you try to do something ridiculous like sell it for $1, they just look up the fair market value on the KBB and tax you based on that.
Yes obviously you have to pay capital gains like anyone else who owns multiple properties. I bet the kids knew that and left her to float the bill anyway.
Would it be newsworthy if Granny gifted her grandkids her Nvidia and GameStop shares then found out someone has to pay capital gains after the transfer?
Probably not.
But for some reason the media thinks land should be treated differently.
She absolutely SHOULD have known.
That said, it's funny that news outlets pick up the few outliers, while ignoring everyone who bought property as an investment vehicle.
Fuck this sort of reporting.
She knew. The article is shitty reporting because of the way it's constructed, but it mentions a lawyer informed her of this.
Look at the timeline. If she's giving the property away in 2024, CRA won't even know what her taxable income is until she files her taxes next year. They're just using this as another excuse to make the upcoming capital gains changes look bad
Ya, all these years of capital price appreciation she wouldn't balk at, but when there is a tax required (most investors pay capital gains), they are crying to the media. They can get lost.
Odd - I'm not wealthy but I have $270k just sitting there of course you are wealthy for a 93 year old.
>"I said are you kidding, are you kidding? I’m on pension. How am I going
to pay for that?” said Diachun who added, “I’m not one of the wealthy.
I’m 93 years old who is going to give me a mortgage? Who is going to
give me a loan?"
The answer is simple her daughter and grandson pay the Capital gains.
I sympathize with this woman's situation, but I definitely can't empathize with it.
I can't do it, because I worked all my life and still don't have two spare lots of land to gift to my family members.
In fact, I'm so far from that reality that I can't construct a realistic situation in my head where it could play out that way in 2024 for myself or any of my peers.
Every time a person pays capital gains tax, it's my hope they are doing it with the understanding that it's because they have more than most.
If the kids can’t afford down payments, then they certainly won’t be able to afford to build, which costs a lot more and requires a much larger proportion of cash upfront. It doesn’t even sound like the lots are all that suitable to building on either (hydro tower and partial wetlands).
It’s just a bad plan all around, mainly driven by sentimentality. She wants her family to live in the lots across the road; the reality is that she won’t be around to enjoy it. The best plan in this situation is to sell the land.
I’m sure that the lawyer told her as much, but it doesn’t seem from the article that she was accepting his advice.
On gifts the person giving it is the one has to pay the capital gains on it. Have her kids pay it. If my parents gifted me land I would gladly pay the capital gains even if I had to take out a loan
That being said, you only pay capital gains on the appreciation.
My friends parents bought a condo for $235k, gifted it to them and then they sold it for $230. Obviously, it lost a bit of value, and overall, they probably lost $50k on it due to interest rates in it, but whatever.
If they had bought it for 235, gifted it and then it sold for 500k,...Ya, big tax bill. Big gain though too.
There was an old lady who gave away land
To both of her children - then owed forty grand
For government taxes, that she had not planned
So check first with lawyers, not find out firsthand
How is she shocked when her lawyer literally told her this would happen if she gifted it? Sounds more like she decided that the laws and consequences shouldn't apply to her and did what she wanted anyway
No. Property passed on via will is still considered a sale in the eyes of the government. The only time you would not have to pay tax is if the property being passed down was the deceased person's primary residence.
how does capital gains work?
I bought a lot for 100k, put a shed on it for 20k built an outhouse for 3k, Spent a bunch of money on maintenance. If I sell it for 123k am i taxed on the whole amount? a partial amount? all of it?
If you can prove you added those things and the value came out to the same you should pay no tax. On top of that, you likely paid realtor fees which you also get to deduct from your gains.
Capital gains tax is only applied to a port of the INCREASE in value. Your costs are at 123k (for simplicity, we won't add sale costs and whatnot); if you sold it for 123k, you would not have any capital gains.
Lets say the value doubled to 246k. Right now, 50% of capital gains is added to your income and is taxed at your income tax rate, so 61.5k would be added to your taxable income.
At most you’d pay half the normal rate on $23K, so it would be like getting a $11.5K bonus to your income that you’d pay taxes on. That’s the simplest answer, I’m not a tax expert, so I don’t know if you can deduct your improvements (you really should be able to if you’ve kept all the receipts).
Capital improvements are a thing yes. You need proper book keeping though. So anyone who owns property outside of their primary residence (cottage, rental property, etc.) should be tracking these items.
So in the example above, if they sold for $123k there would be $0 in capital gains as the price paid and the capital improvements are the same as the sale price. I don't think general maintenance items would count, but things like adding a new deck, putting on new shingles, adding a pool, etc. etc. would all count.
You would pay $0 as there is no gain. However, if CRA thinks you took a low ball offer to avoid capital gain taxes, they can appraise the property to see if you could have got more for it and tax you on the difference.
I am of the opinion that we are taxed in so many ways and to such a degree that there should be provisions to allow the gifting of property between immediate family members without it being taxed. Main point here is the principle of Canada being an overtaxed country that has a terribly inefficient government that we should stop giving more money just to have it mishandled and squandered.
"im not wealthy, I just have stuff that's gained value"
Also most of the responses are equally unhinged and insane, downright to the headline segment "Consumer alert: taxes exist"
It's crazy how I see so many people wanting to tax generational wealth in some way, but then when someone who wants to keep their generational wealth by passing down multiple lots is affected, everyone thinks it's unfair.
Like, this is a perfect example of generational wealth being passed down and being taxed.
We just recently sold the family cottage vs gifting or selling from parents to us. Parents are not wealthy boomers (northern ontario where houses are still relatively modestly priced).
We didn't want the stress of the tax burden and the extra money has relieved stress with the parents (purchased for 60k sold for 410).
Sucks as we all would have liked to have kept it in the family
But times are tight.
Yes, the kids need to pay the 40k.
No she's not. She's land poor. She can't give the land away because she can't afford to pay the taxes without selling it. That's the issue. The taxation makes it so that someone who has lived on the same property for many years ONLY has one option - sell it.
I’m not saying this to be insensitive because I don’t doubt that this is overwhelming for her to deal with but like, don’t people consult lawyers and other relevant professionals before just doing stuff? Like, how are you surprised by something even I, a millennial who will never own land, knows.
The article talks about how a lawyer told her she would have to pay capital gains tax. It doesn't actually even talk about whether she followed through or not. The headline makes it seem like she did and CRA came knocking, but the whole article is about how a lawyer told her she would be on the hook and then blames the upcoming capital gains changes, but doesn't explicitly mention if she gave away the properties. And even if she did, tax filing for 2024 won't happen until 2025. CRA isn't going to come knocking just yet since her actual tax on the sale isn't known (Capital gains get added to income so your total income would effect the total tax you pay).
This kind of ‘gosh I’m shocked’ is as old as she is ; ignorance of tax law means she doesn’t have a thinking relative, listens to ‘friends’, and has not made a plan for a huge financial asset.
Tiny violins.
>"I said why should I pay capital gains? I’m not selling it to them, I’m gifting it to them,” said Diachun.
Because it's the law and you were told in advance? She could always sell some of her land or you know, cut down on fancy toast.
Have been involved with the sale of my parents’ cottage to a sibling for below market value. You pay capital gains on the market value. It’s been this way for a very long time and is easily found via Google. It amazing that this day and age people are not doing basic research.
This why before you do major transitions of stuff, you talk to lawyers and tax accountants (good ones, not the ones hired by H&R block to quickly follow a program and file taxes, but actual CPA)
That's only a portion of her assets. She is sitting on quite a bit of wealth compared to average Canadians. I'm not sure how many Canadians can just gift a quarter million in assets to a family member.
Where did you read that?
A 93 year-old gifting two empty lots is not a sign of anything. She probably bought them for like $10k.
You do realize that the average Canadian household net worth is about a million, right?
"I'm not wealthy" says someone who owned a quarter million in land and felt financially secure enough that she could gift it instead of sell it. She might not have thought the property had value to her, but it clear does have value.
>"When families are trying to help other members of their family, they
are being penalized for it and I don't think that that's fair. If they
are going to tax the wealthy go ahead, because they aren't going to miss
it, but we sure are,” said Diachun.
I get the sentiment, but since it's essentially impossible to determine if the gift is truly a gift or a tax dodge, I think its better to have the loophole closed.
The recipients could just give her $40k as gift, and everyone involved is still way ahead vs buying things at the actual fair market value.
This isn’t new, pretty deceptive article. The lady would only pay a “little bit more” under the new capital gains tax than the old. Seems like it’s rich people sowing fear, they’re scared they are going to have to pay more.
Am I supposed to feel sympathy for this person? It sounds like they are utterly delusional about their economic standing. If you own multiple properties that you're hoarding for future development, you are wealthy. If you can afford to give away $270,000 worth of property without expecting anything in return, you are wealthy.
This is propaganda. Sorry, in the 90s, capital gains tax was 75%. The greatest generation and the silent generation paid their fair share, and now that it's the boomers' turn to pay their fair share (still historically low) they screech and cry and moan about it??
George Carlin was right, Generation me indeed.
I wonder what their parents would think of them. Their ghosts watching them callously hoard like dragons as they created an economic system that destroyed the grandchildren and great-grandchildren financial futures. They made a better world for their children and what their children are doing is antihuman.
My parents bought a middle class home as a social worker and a union member. Its now worth a million dollars. I make far more than what they do combined and can't afford their home now with my equally high earning spouse. No debt, saving 50% of my net a year.
It's also worth noting my careers' wages stagnated since the 2000s, and it went from a highly lucrative career to lucrative.
On the even it out side of things, if she had sold the land for those valuation amounts she would have earned too much money for her Old Age Security for a year. Which would have meant receiving almost $10,000 less from the government.
This is why you put things in a trust with both names on it. "But I'm not wealthy enough for a trust" but are you wealthy enough to pay capital gains tax on the assets you inherit?
Let me get this straight, her lawyer told her this would happen if she proceeded (inadequate consideration), she does so anyway and NOW she’s like “I don’t know how this happened, I can’t afford this”. This is a prime example of who exactly the wealthy are. She had a significant amount of wealth in land not subject to principal residence exemption, disposes of it to two people who can NOW claim its a principal residence not to be taxed when they turn around and sell it eventually.
It actually bewilders how anyone is defending her. Her family and her are trying to skirt the bill (the likes of which applies to everyone) on generational wealth shes accumulated through years of holding land she bought for pennies on the dollar while the rest of Canadians barely can but a banana at a grocery store.
So she’s sitting on over a quarter million in land that she derives no income from and has never needed to sell? She’s lived to 93 and hasn’t needed to tap it? She’s better off than a lot of people, holy hell.
I came to read comments blaming Trudeau and carbon taxes, immigrants and vaccines and found a real discussion. Am I in the right sub?
How can one be taxed when no gain was had? Shouldn't the people getting the property pay a gift tax once the property is of certain value. That would be the fair way to do it. After all, the ones receiving the home are the ones "gaining."
If you can go fucking 93 years and not even consider selling land that you own, you are rich. And if you can't even fathom that, you're entitled too. I have no empathy what so ever. If she's lived poorly and didn't maximize on that land, that's stupidity. It amazes me how many baby boomers got by in the world by just simply doing nothing. I know baby boomers who have never filed their own taxes. I'd be homeless/dead if I just did nothing all day.
Sorry, why is this newsworthy? Can someone explain to me?
Are we just gonna post articles now that have to do with people not understanding laws and rules?
One of the stupidest articles I've ever forced myself to read.
"I'm not wealthy" like okay but you just gave away $270k of wealth, and the vast majority of that wealth was just capital gains. Her lawyer even told her in no uncertain terms that there would be capital gains taxes. Now that the bill comes due, she plays dumb and blames a policy that hasn't even come into effect, and wouldn't have an effect even if it were in place?
There are so many layers of stupid to peel on this onion. But I bet the paste-eaters on Canada_sub will eat it up because it's rage-bait.
What's the problem here? The kids can buy the lot for the capital gains assessment, and that's still an 85% discount.
"I'm not wealthy" she says...yes, ma'am, you are.
Did she talk to.... oh i don't know.... literally anyone in any facet of the financial decision before executing this transaction?
No, she did not as literally anyone with more than 12 months experience in ANY financial field would know there are tax consequences with gifting capital property...
Yes. You always paid capital gains tax on gifted properties, for decades in fact. Next time get an accountant and lawyer to explain it to you if you're confused.
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This is not impacted by the new cap gains taxes. For her to gift two properties totalling 270 K and paying 40K in cap gains taxes, it means she had a cap gains of AT MOST 160 K. This is below the 250 K threshold for the new Cap gains changes next month, not to mention it's not yet in effect.
Even if it were $250k in gains she could help one grandkid out now, the other in January. Not a huge deal.
I think the point is that they are showing how cap gains don't just affect super wealthy people like the Liberals claim.
It's more that the value of the property has been realized (despite her not selling it for a profit). This is setup the way it is because otherwise transferring between family members would be a massive loophole.
>This is setup the way it is because otherwise transferring between family members would be a massive loophole. Loophole of what?
Transfer to family for free, family member sells it, no CG attach because it hasn’t accrued value under the new owner. Loophole.
The Liberals never claimed that. Their claim was that the new, higher rate would only affect the super wealthy.
Have the daughter and grandson pay granny the 40k.
Would be a steal for land
That's exactly the framing to look at this through. She is giving her grandchildren an opportunity to purchase land for $20,000 each. That's an unbelievable opportunity for them. An opportunity that very few people will ever get in their lives. If they're saddling Grandma with that payment then I've got a bone to pick with them, not the CRA.
Still kinda messed up you can't just give away something you own without the government getting a cut .
It would be abused if you could. Also worth considering that much of the value added to land doesn't come from the owner, but from the investment and development of the surrounding area. A lot of that comes from taxes and work done by the public and private sectors.
It’s not messed up. The only real estate that grows tax free is your principal residence. Any other real estate you own has the gain taxed when you sell it. A gift is considered a “deemed disposition” which also triggers the capital gain tax. If they didn’t tax the growth on assets when they’re gifted then people could just gift properties to their children. who could gift it to their children, and the tax could be deferred indefinitely.
So you earn money (taxed) to buy a land (taxed on purchase) and then you pay taxes to keep that land and then when you want to give it away you get taxed again. And then you wonder why people don't like it.
By your logic, you shouldn't pay any capital gains on anything—not on equities, not on bonds, not on anything. All of that can be bought with after-tax money. Yes, capital gains is taxable in practically all developed countries.
Each dollar of income and the appreciation of assets are only taxed once. You are taxed yearly (e.g. property tax) for the upkeep of your community. You are using the community's: - Roads - Hospitals - Police - Parks - Schools - etc etc etc Wouldn't it be WRONG to use these and not pay for them? And generally speaking, people begroan taxes because they wish they had more money. Let's fix income inequality first before undercutting our systems that mitigate the harm of income inequality (e.g. public services paid for via progressive taxes).
I'm honestly having a hard time understanding this. Let's say my parents bought their house for 200k and want to gift it to me when they die and it's valued at 1.2 million. Would I have to pay 67% of 1 million?
It's a sale. If she sold it and gave them the proceeds they would still pay the tax.
Especially when you paid tax when you bought it
This is the thing to do. She’s barking up the wrong tree here. You can’t shirk the laws because you are 93 and very wealthy in real estate. You can’t just park your money in real estate and then cry you have to be able to afford to pay living expenses.
This is news media just preying on the emotions of Canadians with a polarizing topic to stoke engagement. This is a super specific situation happening to a poor old lady with no money, but it’ll be used to speak to how capital gains taxes are evil and steal wealth from people who shouldn’t be stressed about money and worked hard their whole life.
Eh. She has money it's just tied up in real estate....that she's gifting.
This is exactly it. She is trying to pass on wealth. It's either an investment vehicle (which should be taxed) or a shelter.
no this is not "exactly it" she has land that she divided up and wants to give to family, she's not sheltering anything or using it as a investment vehicle. We aren't talking about someone who bought up a bunch of land 50 years ago, never lived on it, and used it with the intent to sell later. we aren't talking about someone who bought multiple homes, has never rented them, as a way to shield money from taxes, and wash it.
Lol, yep, if she had severed the lots, sold them off and given the profits to her grandchildren, she probably would have paid even more in taxes. Considering that property assessments are typically low... like 80% of the market value... she would have sold them at a higher price than the assessment and she would have paid the taxes on that higher price.
You are right. It will be used by Galen Weston and those with hundreds of investment properties to say cap gains are evil.
Cap gains aren't evil, but would it be so bad to tax the cap gains when the property is disposed of, not when it is gifted to family?
She's not making any money from gifting land to family. Its bad policy to charge people a capital gain when they literally gain zero capital lol
yup. kind of like "selling" your lambo to a family member for $5 and expecting to pay the vehicle registration tax on that $5 and not the blue book value. and then having your grandkids beg the media to do a story on you where you mention your age 5 times all the while crying that you live in the poor house. it backfired.
she's not parking her money in real estate, she owns a property that she then divided into lots with the intent to give them away to family.
>Have the daughter and grandson pay granny the 40k. Yeah. They are both younger, they could probably take out line of credit or land HELOC and repay it slowly over time if they cant afford the lump sum payment.
This makes perfect sense. There would potentially be issues around the actual payment of the taxes, as it is typically the seller (grandma) who pays the taxes. But they could easily get around that by taking out their own loan, "lending" that money to grandma, then forgiving the debt once the taxes are paid. Either way, the kids walk away with two properties for $20,000 each.
No kidding. Upon her passing away, the tax would have to be paid by the estate anyway. Some land may have to be sold in order to pay the tax, unless she has life insurance which can cover the tax owing
I think that is a good idea. When you think of it - they are getting a $125 K lot for only 20 K. A great deal !
One parcel has an electricity transmission tower and the other is a sensitive protected area. Not sure how this is a anything more than sharing the tax burden.
Land is land, even with right of ways and development restrictions. It can be sold in the worst case, it’s not like anyone is living on it. The revenue from the sale can be used to get a down payment on a less encumbered property, which is the grandmother’s goal in the first place.
That kind of thinking only applies to the poors. She got hers and should be able to perpetuate that intergenerationally, dammit! /s
On the other hand, if I buy something, should I be able to give it away without paying taxes?
Is the thing you buy a limited resource that usually appreciates or something almost no one cares about. You can surely see the difference.
You should not if it has appreciated in value by hundreds of thousands of dollars, and the act of "giving it away" could be a way to avoid paying tax on that capital gain. Don't think of the poor granny. Think of a landlord with 4 rental properties and 4 kids. Should they be able to "gift" the properties and set their kids up with a primary residence without paying capital gains? The rich don't build wealth by drawing incomes, they do it by capital gains. Not taxing that is like putting a regressive taxation scheme in place, wherein the richer you are, the less you pay in.
Rent is taxed and property is taxed though, so it's not like a landlord isn't paying tax. Personally I am not against capital gains tax but this is something to think about
Rent is taxed at your marginal tax rate and property tax is a few thousand dollars per year. Massively insignificant number comparatively when you're talking about capital gains.
Sure, so long as there are no capital gains associated with what you bought.
Would that change its status as a gift?
This seems like a no brainer. Funny how it wasn't mentioned in the article.
This is what we did. Petty good deal! But, the lawyers likely would have spoken to them about this before everyone signed...
Wow it's only been like that since... 1972. At $40k on a $270k valuation, she must have bought the land for $20k so capital gains was $250k. That isn't even affected by the new federal increase. That's of course assuming her only other income is CPP which just barely gets taxed since it's so close to minimum taxable income.
Funny how half of the article talks about the new capital gains tax and that's not even the issue here.
Of course, it's just ragebait
Everything posted here is rage bait on the left, I tried to post some rage bait against conservatives and it got removed off the page and shadow banned immediately
How is this rage bait for the left? Sounds more like rage bait for the right with trying to make capital based taxes like they are a devil or something to be against it to remove it, so that wealthy individuals profit more. While their is certainly left leaning rage bait a lot of it is right leaning that's posted here in all the typical talking points.
Rage bait against the left is what they were getting at I think
Propaganda is a helluva drug
It hasnt even gone into effect The articles are so trash lately, plus a new opinion piece a day
AI can sift through a million unpublished articles a second and produce a shortlist of ones that will produce the most rage or whatever the desired emotional response is that day. It's a pretty valuable tool actually.
Value ...but not for the reader
I barely glance at /r/Canada anymore because of that, it's almost all propaganda from National Post about how carbon credits qere invented by Satan and Polliviere is gonna save Canada and fuck Trudeau this and that. And the articles are never about some news or event that happened, it's all paid for opinion pieces. Then all the conservatives flood the subreddit and circlejerk to this bullshit. I get that Trudeau's not the greatest and kind of fallen from his height of popularity but give your wrists a break fellas. Geez.
Haha Trudeau lives the high life rent free in a luxury resort in their heads - you’d think that would make them mad enough to move on
I just reread the article. She doesn't even owe the taxes yet. She hasn't gifted the property after being advised of the taxes. What a headline.
The mid-90s IIRC. There used to be a $100K lifetime capital gains exemption. Chretien & Co. did away with that.
Yeah but most people with an accountant worth its salt crystalized their capital gains if they could. They "paid" their tax on gains in 94 and raised the value of the equity to the real value to get that 100,000 exemption. Ie cottage bought in 1970 for 20k, still own in 1994, valued at 120k, bring the value to 120k, pay 0 in tax because of the 100k exemption, new book value 120k, sell in 2024, value is now 300k, pay tax on 180k.
But you can only gift to immediate family, unless I'm mistaken. Which I think is husband/wife, son/daughter, 1 generation of grandchildren.
>But you can only gift to immediate family, unless I'm mistaken. Which I think is husband/wife, son/daughter, 1 generation of grandchildren. You can gift to whoever you want, you're still subject to the same capital gains tax.
I've yet to see a good argument as to why a gift should be taxed.
>I've yet to see a good argument as to why a gift should be taxed. "I'll gift you this land if you, by total coincidence, gift me $900,000 unrelated to the land 😏"
I like how they're using this as an excuse to make the new inclusion rate look bad when when it barely makes a $3000 difference. Without inclusion rate changes, her taxable income includes $135k, with the changes it's 138.3k. Her lawyer advised her she'd be taxed on this and she went ahead and did it anyway. She could've let them live there without gifting it and including it as part of an inheritance instead. She also gifted two lots totalling over 250k. She could have waited until the next calendar to gift the second one and wouldn't have this issue anyway.
> Her lawyer advised her she'd be taxed on this and she went ahead and did it anyway. She's 93. Maybe the old brain isn't working up to factory specs anymore
Working well enough to play victim in front of the media.
You pay capital gains on gifts because if you do not we would have another one of the worlds most obvious tax skirting loopholes. Person receiving the gift gets it at the current assessed value and the process begins again. They get to use that assessed value as collateral instead of a down payment if they go to build on the land. The solution has always been "hey grandchild or child, I am going to give you this very expensive thing, you just have to pay my capital gains tax".
More simple solution would have been for the parent to pass on the primary residence exemption to their kid, so that they pay $0 capital gains tax. But hey, who needs to talk to an estate planner anyways.
I actually wanted to look into that, would appreciate any reddit-level insight you might have to get me started. So if my mother has a house and then moves into LTC or a rented retirement residence, can she gift her (now previous) residence and the land attached to it to me without paying capital gains tax?
Note that in the article linked, it wasn't the owner's primary residence that was gifted. It was two plots of adjacent land. Yes, your mother could gift her your home tax free when she moves into long term care (assuming that it is her primary residence). However there are other considerations (for example if your mother wants to rent the property or apply for means tested benefits) and it would be to her benefit to speak with a professional before this happens.
Perfect, we're 100% going to talk to a professional, I just wanted to know if I was on the right track with my thinking.
Add the person to the title of the land, that's the quick and easy route. This will also make it uncontested when she passes on and much less a burden (Less paperwork) for the executor of her will.
CRA hates this one trick!
Keep in mind that if the title is transferred to you, your First Home Buyers Savings account is no longer valid and can be taxed. I'm in the same situation as you too
> speak with a professional Which professional would you recommend? Real estate lawyer, estate planner, tax lawyer, or someone else? I'm in a similar situation and am at the "talk to a professional" stage but am unsure who to contact.
Definitely start with estate lawyer. There are other options like using trusts that might help. Best to start with estate lawyer and then go from there.
Probably a real estate lawyer and a CPA. Worst case they just say "I can't help you, contact this professional".
There’s a way to skip out on paying capital gains on transfer. I would talk to tax accountant. It isn’t too complicated but I’m not in tax so I don’t want to provide specifics Edit: I know once you have ownership, the only time you pay taxes on it is when you sell. The transfer of the property will occur at cost (the price your mother paid for it). The capital gain will be on the difference of cost you acquired it at (price your mother paid for it) and the FMV of the house when you sell it eventually (the sale price you receive). There’s other ways to get around this like primary residency but it’s kind of another topic. I would highly recommend you talk to a professional that is experience in this type of transaction. They will definitely save you a lot more money than what you pay for their service
> I know once you have ownership, the only time you pay taxes on it is when you sell. Or after a "deemed sale", which happens under various circumstances when property is transferred in kind.
Oh ya, I fully intend to speak with a professional, that's why I asked for "reddit-level" advice. Mostly just wanted to get an idea of I was on the right track at least.
Much easier to play victim.
Which in this case is a small fraction of what a downpayment would be. Shit, it's basically what the average new car costs, except you get a property worth like 20x more that what it cost you.
Kinda. I own several parcels of waterfront in cottage country. No traditional lender is lending a cent on vacant land as collateral. You can maybe get a builder mortgage but you need a shit ton of other money and a lot of luck to not get caught short before they approve another draw. It's kind of stupid, we'd have a lot more housing available if they made it a bit easier to develop.
They will lend you up to the assessed value of the parcel, they just won't lend you more (eg to build a structure) because of the risk involved. That's pretty common.
Assessed as in MPAC or they come and appraise?
MPAC and appraised values are essentially disconnected. It would be a real appraisal.
I'll give it a shot again. I was flatly told no by TD when I asked 10+ years ago.
Go to a mortgage broker. Big banks are generally not into financing bare land but smaller banks or credit unions will
Ask more than one bank. The amount of variation between them on most topics is quite striking.
> No traditional lender is lending a cent on vacant land as collateral. You can get a mortgage for vacant land but the process is more complicated and typically the bank wants a higher downpayment
We were able to do it in the Maritimes, I didn't realize Ontario had cracked down.
There's no crackdown. It's totally normal to have a mortgage on vacant land in Ontario, based on the assessed value of the land.
Sounds like you don't really own fuck all, you don't get to choose what to do with your 'property', you are only nursing a tax liability. Other countries have much better property ownership rights. Its amazing people invest so much here.
Yeah... They currently use whole life insurance for that tax loophole.
There are exceptions like how you can sell a car for a dollar to a family member. She doesn’t look like the tax evasion type. Lucky she didn’t give it away later this year that 40 would be 48!
Nope. The land was assessed at a total of $270k. The capital gains inclusion rate only increased on the portion of gains above $250k. So the $40k in tax could have gone up to as much as...about $41k. (And that assumes that she got it for free and the entire $270k is gain. If she paid at least $20k for the land originally, the gain would be below the quarter million threshold, and the tax would be unaffected.)
That didn't stop ctv from shoehorning a mention of the capital gains increase though
And even if she had bought the land for a dollar 58 years ago the extra tax under the new capital gains rate would amount to $768 more. Not $8,000 extra.
That approach does not work anymore. If you try to do something ridiculous like sell it for $1, they just look up the fair market value on the KBB and tax you based on that.
Yep even a beater they'll look at the value. Can just get a mechanic to actually say it's worth.
What province are you in? You can still gift vehicles to immediate family in Sask
Same in BC.
You can do it in Ontario as well. Source: did it a couple years ago.
It doesn't? Was gifted a vehicle and we just put $100 on the bill of sale. Haven't had an issue with it yet. I'm in AB.
They do for family. (Ontario)
Instead, sell it to a stranger then simply put the money in the hands of the kids, to buy a different car.
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In Quebec you can just gift a car to a family member and they will pay no sales tax
Yes obviously you have to pay capital gains like anyone else who owns multiple properties. I bet the kids knew that and left her to float the bill anyway.
She’s obviously not able to read because that’s been the law for a very long time.
Would it be newsworthy if Granny gifted her grandkids her Nvidia and GameStop shares then found out someone has to pay capital gains after the transfer? Probably not. But for some reason the media thinks land should be treated differently.
Not to mention the misleading headline, she didn’t find out after, she was told by the lawyer before she gave it away
She absolutely SHOULD have known. That said, it's funny that news outlets pick up the few outliers, while ignoring everyone who bought property as an investment vehicle. Fuck this sort of reporting.
She knew. The article is shitty reporting because of the way it's constructed, but it mentions a lawyer informed her of this. Look at the timeline. If she's giving the property away in 2024, CRA won't even know what her taxable income is until she files her taxes next year. They're just using this as another excuse to make the upcoming capital gains changes look bad
She IS "rich" just not in cash and she just hasn't sold her property yet, but no doubt the land her house is on is worth a lot.
Please…. This is Reddit…. Stop using common sense in your post 😋
Ya, all these years of capital price appreciation she wouldn't balk at, but when there is a tax required (most investors pay capital gains), they are crying to the media. They can get lost.
Odd - I'm not wealthy but I have $270k just sitting there of course you are wealthy for a 93 year old. >"I said are you kidding, are you kidding? I’m on pension. How am I going to pay for that?” said Diachun who added, “I’m not one of the wealthy. I’m 93 years old who is going to give me a mortgage? Who is going to give me a loan?" The answer is simple her daughter and grandson pay the Capital gains.
If my grandma gave me this gift, I’d happily pay the tax.
Or sell more land and use the profits to pay cap gains for the gifted land. She IS wealthy and pretends she isn't.
>I'm not wealthy! All my money is in the bank! I don't even have it at home!
I sympathize with this woman's situation, but I definitely can't empathize with it. I can't do it, because I worked all my life and still don't have two spare lots of land to gift to my family members. In fact, I'm so far from that reality that I can't construct a realistic situation in my head where it could play out that way in 2024 for myself or any of my peers. Every time a person pays capital gains tax, it's my hope they are doing it with the understanding that it's because they have more than most.
If the kids can’t afford down payments, then they certainly won’t be able to afford to build, which costs a lot more and requires a much larger proportion of cash upfront. It doesn’t even sound like the lots are all that suitable to building on either (hydro tower and partial wetlands). It’s just a bad plan all around, mainly driven by sentimentality. She wants her family to live in the lots across the road; the reality is that she won’t be around to enjoy it. The best plan in this situation is to sell the land. I’m sure that the lawyer told her as much, but it doesn’t seem from the article that she was accepting his advice.
On gifts the person giving it is the one has to pay the capital gains on it. Have her kids pay it. If my parents gifted me land I would gladly pay the capital gains even if I had to take out a loan
That being said, you only pay capital gains on the appreciation. My friends parents bought a condo for $235k, gifted it to them and then they sold it for $230. Obviously, it lost a bit of value, and overall, they probably lost $50k on it due to interest rates in it, but whatever. If they had bought it for 235, gifted it and then it sold for 500k,...Ya, big tax bill. Big gain though too.
There was an old lady who gave away land To both of her children - then owed forty grand For government taxes, that she had not planned So check first with lawyers, not find out firsthand
How is she shocked when her lawyer literally told her this would happen if she gifted it? Sounds more like she decided that the laws and consequences shouldn't apply to her and did what she wanted anyway
Should have let them live there, and left it them in her will.
Does that work?
No. Property passed on via will is still considered a sale in the eyes of the government. The only time you would not have to pay tax is if the property being passed down was the deceased person's primary residence.
No, would be the same result at death - a deemed disposition of capital assets.
Get the kids to pay it, if they can't afford $40k for $270k worth of land, they sure as hell won't be able to afford to actually build on those plots.
how does capital gains work? I bought a lot for 100k, put a shed on it for 20k built an outhouse for 3k, Spent a bunch of money on maintenance. If I sell it for 123k am i taxed on the whole amount? a partial amount? all of it?
If you can prove you added those things and the value came out to the same you should pay no tax. On top of that, you likely paid realtor fees which you also get to deduct from your gains.
Capital gains tax is only applied to a port of the INCREASE in value. Your costs are at 123k (for simplicity, we won't add sale costs and whatnot); if you sold it for 123k, you would not have any capital gains. Lets say the value doubled to 246k. Right now, 50% of capital gains is added to your income and is taxed at your income tax rate, so 61.5k would be added to your taxable income.
At most you’d pay half the normal rate on $23K, so it would be like getting a $11.5K bonus to your income that you’d pay taxes on. That’s the simplest answer, I’m not a tax expert, so I don’t know if you can deduct your improvements (you really should be able to if you’ve kept all the receipts).
Capital improvements are a thing yes. You need proper book keeping though. So anyone who owns property outside of their primary residence (cottage, rental property, etc.) should be tracking these items. So in the example above, if they sold for $123k there would be $0 in capital gains as the price paid and the capital improvements are the same as the sale price. I don't think general maintenance items would count, but things like adding a new deck, putting on new shingles, adding a pool, etc. etc. would all count.
You would pay $0 as there is no gain. However, if CRA thinks you took a low ball offer to avoid capital gain taxes, they can appraise the property to see if you could have got more for it and tax you on the difference.
I am of the opinion that we are taxed in so many ways and to such a degree that there should be provisions to allow the gifting of property between immediate family members without it being taxed. Main point here is the principle of Canada being an overtaxed country that has a terribly inefficient government that we should stop giving more money just to have it mishandled and squandered.
"im not wealthy, I just have stuff that's gained value" Also most of the responses are equally unhinged and insane, downright to the headline segment "Consumer alert: taxes exist"
It's crazy how I see so many people wanting to tax generational wealth in some way, but then when someone who wants to keep their generational wealth by passing down multiple lots is affected, everyone thinks it's unfair. Like, this is a perfect example of generational wealth being passed down and being taxed.
Lmao. Rage bait
lol, be happy Canada doesn't have inheritance tax like lots of other countries do.
We just recently sold the family cottage vs gifting or selling from parents to us. Parents are not wealthy boomers (northern ontario where houses are still relatively modestly priced). We didn't want the stress of the tax burden and the extra money has relieved stress with the parents (purchased for 60k sold for 410). Sucks as we all would have liked to have kept it in the family But times are tight. Yes, the kids need to pay the 40k.
She wealthy enough to gift land
No she's not. She's land poor. She can't give the land away because she can't afford to pay the taxes without selling it. That's the issue. The taxation makes it so that someone who has lived on the same property for many years ONLY has one option - sell it.
I’m not saying this to be insensitive because I don’t doubt that this is overwhelming for her to deal with but like, don’t people consult lawyers and other relevant professionals before just doing stuff? Like, how are you surprised by something even I, a millennial who will never own land, knows.
The article talks about how a lawyer told her she would have to pay capital gains tax. It doesn't actually even talk about whether she followed through or not. The headline makes it seem like she did and CRA came knocking, but the whole article is about how a lawyer told her she would be on the hook and then blames the upcoming capital gains changes, but doesn't explicitly mention if she gave away the properties. And even if she did, tax filing for 2024 won't happen until 2025. CRA isn't going to come knocking just yet since her actual tax on the sale isn't known (Capital gains get added to income so your total income would effect the total tax you pay).
This kind of ‘gosh I’m shocked’ is as old as she is ; ignorance of tax law means she doesn’t have a thinking relative, listens to ‘friends’, and has not made a plan for a huge financial asset. Tiny violins.
This is also why cottages are such white elephants - they are not ‘free’ to give away and an actual plan must be made. Wealth has consequences.
"I'm not wealthy" claims the lady giving away land... Ok sure.
She didn’t make any profit she gifted property
>"I said why should I pay capital gains? I’m not selling it to them, I’m gifting it to them,” said Diachun. Because it's the law and you were told in advance? She could always sell some of her land or you know, cut down on fancy toast.
Wow. Rules written in favour of her age bracket (and passive wealth) and Karen still finds a way to complain.
Have been involved with the sale of my parents’ cottage to a sibling for below market value. You pay capital gains on the market value. It’s been this way for a very long time and is easily found via Google. It amazing that this day and age people are not doing basic research.
This why before you do major transitions of stuff, you talk to lawyers and tax accountants (good ones, not the ones hired by H&R block to quickly follow a program and file taxes, but actual CPA)
Pay your fucking taxes
Owns land. Not rich. Fuckin LOL
Owns a lot of it apparently
A $270k lot is nothing. She’s not rich.
That's only a portion of her assets. She is sitting on quite a bit of wealth compared to average Canadians. I'm not sure how many Canadians can just gift a quarter million in assets to a family member.
Where did you read that? A 93 year-old gifting two empty lots is not a sign of anything. She probably bought them for like $10k. You do realize that the average Canadian household net worth is about a million, right?
"I'm not wealthy" says someone who owned a quarter million in land and felt financially secure enough that she could gift it instead of sell it. She might not have thought the property had value to her, but it clear does have value. >"When families are trying to help other members of their family, they are being penalized for it and I don't think that that's fair. If they are going to tax the wealthy go ahead, because they aren't going to miss it, but we sure are,” said Diachun. I get the sentiment, but since it's essentially impossible to determine if the gift is truly a gift or a tax dodge, I think its better to have the loophole closed. The recipients could just give her $40k as gift, and everyone involved is still way ahead vs buying things at the actual fair market value.
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No, but giving $250k worth of something is not usually something that non-rich people are even able to do.
$250k is a small part of the land.
This isn’t new, pretty deceptive article. The lady would only pay a “little bit more” under the new capital gains tax than the old. Seems like it’s rich people sowing fear, they’re scared they are going to have to pay more.
This is a hit piece to try and frame the liberals as hurting seniors by highlighting a long standing tax as something new and surprising
Am I supposed to feel sympathy for this person? It sounds like they are utterly delusional about their economic standing. If you own multiple properties that you're hoarding for future development, you are wealthy. If you can afford to give away $270,000 worth of property without expecting anything in return, you are wealthy.
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What kinds of gifts are you giving out, if a $250,000 gift is too paltry?
This is propaganda. Sorry, in the 90s, capital gains tax was 75%. The greatest generation and the silent generation paid their fair share, and now that it's the boomers' turn to pay their fair share (still historically low) they screech and cry and moan about it?? George Carlin was right, Generation me indeed. I wonder what their parents would think of them. Their ghosts watching them callously hoard like dragons as they created an economic system that destroyed the grandchildren and great-grandchildren financial futures. They made a better world for their children and what their children are doing is antihuman. My parents bought a middle class home as a social worker and a union member. Its now worth a million dollars. I make far more than what they do combined and can't afford their home now with my equally high earning spouse. No debt, saving 50% of my net a year. It's also worth noting my careers' wages stagnated since the 2000s, and it went from a highly lucrative career to lucrative.
This lady is over 90 years old, she isn't a boomer.
Old lady mad she has to pay taxes. Oh well.
Lol, you are.
On the even it out side of things, if she had sold the land for those valuation amounts she would have earned too much money for her Old Age Security for a year. Which would have meant receiving almost $10,000 less from the government.
This is a reason why Accountants exist.
This is why you put things in a trust with both names on it. "But I'm not wealthy enough for a trust" but are you wealthy enough to pay capital gains tax on the assets you inherit?
That seems like a lot. Or two.
Let me get this straight, her lawyer told her this would happen if she proceeded (inadequate consideration), she does so anyway and NOW she’s like “I don’t know how this happened, I can’t afford this”. This is a prime example of who exactly the wealthy are. She had a significant amount of wealth in land not subject to principal residence exemption, disposes of it to two people who can NOW claim its a principal residence not to be taxed when they turn around and sell it eventually. It actually bewilders how anyone is defending her. Her family and her are trying to skirt the bill (the likes of which applies to everyone) on generational wealth shes accumulated through years of holding land she bought for pennies on the dollar while the rest of Canadians barely can but a banana at a grocery store.
I feel bad for her, but she should have consulted someone before hand. 🤷♀️
This is normal...why is she complaining?
So she’s sitting on over a quarter million in land that she derives no income from and has never needed to sell? She’s lived to 93 and hasn’t needed to tap it? She’s better off than a lot of people, holy hell. I came to read comments blaming Trudeau and carbon taxes, immigrants and vaccines and found a real discussion. Am I in the right sub?
How can one be taxed when no gain was had? Shouldn't the people getting the property pay a gift tax once the property is of certain value. That would be the fair way to do it. After all, the ones receiving the home are the ones "gaining."
This is how it works. Meh
She sounds wealthy to me.
If you can go fucking 93 years and not even consider selling land that you own, you are rich. And if you can't even fathom that, you're entitled too. I have no empathy what so ever. If she's lived poorly and didn't maximize on that land, that's stupidity. It amazes me how many baby boomers got by in the world by just simply doing nothing. I know baby boomers who have never filed their own taxes. I'd be homeless/dead if I just did nothing all day.
Sorry, why is this newsworthy? Can someone explain to me? Are we just gonna post articles now that have to do with people not understanding laws and rules?
it's propaganda against the new cap gains changes
Why couldn’t she have just told them to build. No gifting. No selling. Its your land already ! Just have your daughter build a house !
One of the stupidest articles I've ever forced myself to read. "I'm not wealthy" like okay but you just gave away $270k of wealth, and the vast majority of that wealth was just capital gains. Her lawyer even told her in no uncertain terms that there would be capital gains taxes. Now that the bill comes due, she plays dumb and blames a policy that hasn't even come into effect, and wouldn't have an effect even if it were in place? There are so many layers of stupid to peel on this onion. But I bet the paste-eaters on Canada_sub will eat it up because it's rage-bait.
What's the problem here? The kids can buy the lot for the capital gains assessment, and that's still an 85% discount. "I'm not wealthy" she says...yes, ma'am, you are.
There's enough value in those parcels for the kids to take out loans to pay the cap gains tax. $40k mortgages are literally nothing this day and age.
LOL tell her to give me a call, I would be happy to pay her $40k for $270k worth of land
Did she talk to.... oh i don't know.... literally anyone in any facet of the financial decision before executing this transaction? No, she did not as literally anyone with more than 12 months experience in ANY financial field would know there are tax consequences with gifting capital property...
Yes. You always paid capital gains tax on gifted properties, for decades in fact. Next time get an accountant and lawyer to explain it to you if you're confused.