If you’ve inherited a home, you may become responsible for the expenses that come along with it, including (but not exclusive to):
- Cost of insurance and ongoing care of the home and property that may be a condition of policy coverage.
- General home and property upkeep
- Property tax
- Capital gains tax*
- Income tax (if home used as a source of revenue)
- Probate fees
- Cost of renovation and repair to sell the property with a Realtor or real estate agent.
An additional note is needed regarding *capital gains tax. In Canada, capital gains are treated as a type of income, and are thus taxable. That’s why it is called capital gains tax. While (in general) an inherited property is non-taxable in Canada, it can be if you wait to sell it. A capital gain on a home is the profit you make when you sell the home after you’ve had it in your possession. That possession begins once the paperwork on your inheritance has been processed.
For example, if you’ve inherited a property with a current Winnipeg market value of $100,000, and you wait to sell it two years from now when the market value is $150,000, you are faced with a capital gains tax on $50,000. As you can see, if you want to sell your inherited property, you need to do so right away, not only to avoid the current cost burden, but the potential capital gains tax to boot.