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“You need to have a conversation about what will happen to your real estate holdings with your children if they’re 40 years of age or older or if you are turning 70, whichever is earlier. Certain things take time to plan if you want to do them in a tax-efficient manner,” he says. Yet, even those with existing plans in place for bequeathing such properties must now revisit those calculations. As of June 25, the capital gains inclusion rate will rise to 66.7 per cent on financial gains in excess of $250,000 from the current 50 per cent threshold for individuals.
In situations in which property is transferred or gifted to a spouse, attribution laws allow them to defer capital gains taxes until the property is sold. That’s not the case for children and grandchildren. “You have to dispose of the asset at the fair market value,” she says, noting that the taxes will be incurred then.