What You Need to Know About Taxes when Making Gifts
While many parents want to bless their children financially, confusion about taxes abounds. Some 68% of Canadians are unsure of the tax rules regarding financial gifting. The good news is that you can give as much cash as you want to any person, related or not, without incurring taxes on the gift.
However, any gift of property, such as a home which is not considered your principal residence, given after the value has gone up, is subject to Canada's 50% capital gains tax. As Jamie Golombek, Managing Director, Tax and Estate Planning at CIBC, explains, “if you purchased a home for $350,000, but you gift it after it's reached a market value of $550,000, you will be accountable for reporting the $200,000 capital gain from the property (assuming it was not your principal residence). Fifty per cent of that capital gain, $100,000, is taxable.”