Connect with us

World

‘I’m not wealthy’: Ontario senior shocked she owes $40,000 in capital gains after gifting land

Published

on

‘I’m not wealthy’: Ontario senior shocked she owes ,000 in capital gains after gifting land


An Ontario senior who wanted to help her daughter and grandson eventually own homes one day decided to give them two lots on her property as a gift—but she didn’t know it would eventually cost her tens of thousands of dollars.


Liz Diachun, 93, has lived on her farm property in Warkworth for 58 years and said she wanted her family to live in the lots across the road.


“There are a couple of lots there that you could build on and of course they were thrilled and I said to them I’m going to gift it to you,” she said.


“With the cost of rent these days they are having to pay something like $2,500 a month to rent houses and who can save up for a down payment with rents like that.”


Diachun’s lawyer told her that even though she was giving the land away, she would have to get it appraised to pay capital gains.


“I said why should I pay capital gains? I’m not selling it to them, I’m gifting it to them,” said Diachun.


One lot has a hydro tower on it and the other is partial wetlands, still they were appraised at $125,000 and $145,000, totalling $270,000.


Diachun’s lawyer told her she would have to pay the Canada Revenue Agency (CRA) about $40,000 in capital gains taxes.


“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?”


Next month, the federal government will change the capital gains inclusion rate from 50 per cent to 67 per cent on amounts over $250,000.


Canada’s Finance Minister Chrystia Freeland said in her announcement the changes to the capital gains system will only impact Canada’s richest citizens.


“We are making Canada’s tax system more fair by ensuring the wealthiest pay their fair share” said Freeland when the budget was delivered on April 16, 2024.


Real estate lawyer Mark Weisleder, co-founder of Real Estate lawyers.ca said the coming rules are causing a lot of confusion and stress for families who are feeling rushed to make decisions.


“It’s created a lot of uncertaintym” said Weislederm who added that, “a person may not make any money from a gift, but they will still have to pay income tax on it.”


Weisleder said even when giving away property, the CRA still wants it’s share of capital gains.


“CRA makes it very clear when you transfer a property, even as a gift it’s deemed to be transferred at fair market value,” said Weisleder.


Diachun feels the capital gains tax is unfair for families who are trying to help their children own a home.


“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.


Many families are trying to make decisions on cottages, businesses and properties before the June 25 deadline. If you have questions about capital gains, you’re best to speak to your accountant or estate planner.

Continue Reading