{"id":289019,"date":"2026-02-13T09:01:15","date_gmt":"2026-02-13T09:01:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/289019\/"},"modified":"2026-02-13T09:01:15","modified_gmt":"2026-02-13T09:01:15","slug":"will-our-children-need-to-pay-capital-gains-on-land-they-inherit","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/289019\/","title":{"rendered":"\u2018Will our children need to pay capital gains on land they inherit?\u2019"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Illustration by The Globe and Mail<\/p>\n

Q: My wife inherited 150 acres of land in the Alberta foothills 42 years ago. There are no buildings and it has been leased for cattle grazing. Our four children will inherit this property. After my wife\u2019s death, when they take title, will they have to pay capital gains if they do not sell? How is the value of the property determined from over four decades ago?<\/p>\n

We asked Jodie Stauffer, CFP, financial planner with Money Coaches Canada, to answer this one.<\/p>\n

When planning to gift or transfer farmland by inheritance in Alberta, a crucial question arises: How should it be classified, particularly since the land is leased for cattle grazing? The key issue, said Ms. Stauffer, is whether it qualifies as Qualified Farm Property under Canadian tax law, as this classification impacts the tax implications upon the owner\u2019s death.<\/p>\n

At the time of death, the Canadian tax law triggers a \u201cdeemed disposition,\u201d she explained. \u201cWhat this means for tax purposes is that the farmland is treated as if it were sold at a fair market price\/value (FMV) on the date of death. Fair market value is the price a knowledgeable buyer would pay at arm\u2019s length in an open market, or what any reasonable person would pay.\u201d<\/p>\n

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Typically, to determine FMV, a professional land appraisal would consider recent comparable sales and income generated from the land. According to Ms. Stauffer, the CRA does not require an appraisal by law, but it can save time and help avoid future issues. If documents from 42 years ago are not available, then historical value assessments or retrospective evaluations by a professional appraiser can establish a reasonable FMV.<\/p>\n

\u201cIn cases where the farmland does not meet Qualified Farm Property criteria, capital gains will be calculated on the deceased\u2019s final tax return,\u201d she said. <\/p>\n

The estate will then pay the taxes, and the children will inherit the property at its new FMV, known as the adjusted cost base. This situation means the children incur no immediate tax liability; they face capital gains tax only when they sell the property, based on the difference between their selling price and the inherited adjusted cost base.<\/p>\n

If, on the other hand, the farmland meets the criteria for Qualified Farm Property, it benefits from favourable tax treatment. The CRA defines Qualified Farm Property as real property used by the taxpayer or their close family for farming, Ms. Stauffer said. It\u2019s essential to note that leasing land alone does not guarantee Qualified Farm Property status; actual farming operations must conform to CRA definitions, as passive rental income may disqualify.<\/p>\n

Additionally, if the land meets Qualified Farm Property criteria, she offered these tips: The estate may utilize a tax-deferred rollover to transfer the property to the children at the original adjusted-cost base, resulting in no immediate capital gains tax liability. Alternatively, employing the Lifetime Capital Gains Exemption can strategically trigger capital gains while sheltering up to $1,250,000 from tax on the sale of the Qualified Farm Property. <\/p>\n

\u201cThis approach can lead to significant long-term tax savings for the estate and the children, especially given the potential appreciation of land values over 42 years,\u201d Ms. Stauffer said. \u201cImplementing these strategies is crucial for minimizing tax burdens on your wife\u2019s estate and protecting the children\u2019s financial future.\u201d<\/p>\n

Do you want advice on a financial planning or retirement issue that\u2019s affecting you? Send us an e-mail.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Illustration by The Globe and Mail Q: My wife inherited 150 acres of…\n","protected":false},"author":2,"featured_media":105956,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[114,268,85,46,266,267,3681],"class_list":{"0":"post-289019","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-il","11":"tag-israel","12":"tag-personal-finance","13":"tag-personalfinance","14":"tag-r-fp"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/289019","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=289019"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/289019\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/105956"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=289019"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=289019"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=289019"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}