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People that inherit a property have three choices: live in the residence, rent it or sell the property. Each has legal implications.
“That is why anyone in this situation should seek the advice of a qualified real estate lawyer,” says Edmonton real estate lawyer Sean Schaefer. “They can guide you through the legal aspects of the transaction and avoid potential unwanted surprises.”
Canada does not have an inheritance tax but there will still be other expenses to consider, says Schaefer.
“If you want to make an inherited home your primary residence, you will have to assume all costs associated with it, such as utility charges and property taxes levied by the municipality,” he says. “Before moving in, it is wise to hire a home inspector to evaluate the property so you have an idea of what should be updated or repaired.”
There could also be tax consequences if you sell your existing dwelling to move into an inherited home, says Schaefer.
“This is another example of where you should seek professional advice so that you understand the benefits of any decision you are making concerning a primary residence,” he says.
If you sell the inherited home, there will be capital gain taxes due for the amount it increased in value between the inheritance and the sale, Schaefer adds.
“And if you decide to rent out the inherited property to generate additional income, you must understand the complexities of the Residential Tenancies Act, especially if you have no prior experience being a landlord,” he says.
