People give family members gifts for all sorts of reasons whether it be an early estate or a wedding gift. Today we will look into how these gifts could affect either yourself or the recipient of the gift. Like everything we do financially, gifts should be planned to maximize the benefit and pay the least tax possible, as well as to avoid any unintended consequences. We will look into different types of gifts, such as:
Gifting a cottage to a family member could be done during the lifetime of the cottage owner or through his/her estate. However a gift would result in a deemed disposition for tax purposes, and if the property had risen in value the person making the gift would be liable for capital gains taxes. Following the gift any future taxes would be assumed by the recipient of the gift. For example, Rob and Tammy gift their cottage to their son Edward. In this situation, Edward will assume future taxes on the entire Cabin. This includes any future capital gains on the cottage. In order to reduce the taxes paid by Edward, Rob and Tammy could sell the cottage to Edward and value it slightly lesser than it’s original value, but that price would still need to be justifiable as the fair market value.
- Jai Gandhi, Financial Planning Assistant
Jai Gandhi is a Financial Planning Assistant at Endeavour Wealth Management with iA Private Wealth, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.
This information has been prepared by Jai Gandhi who is an Financial Planning Assistant for iA Private Wealth and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered.
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