I hope you can help me and a few of my friends. I am a widow, 80 years old, with three married children. I intend to sell my house and rent an apartment. I’d like to make a present of money to each of my children with the proceeds of the sale and put the remaining money into some mutual funds. Can I do this? What about income tax?
By Olev Edur
First, I presume that the house is your principal residence, in which case, you needn’t worry at all about tax. Just be sure to report the sale and designate the property on Schedule 3, Capital Gains (or Losses), and complete Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust); failure to do so can land you in a heap of tax trouble, so don’t forget this vital step when tax time rolls around. The proceeds of the sale will be yours completely tax-free, to do with what you will, and your children won’t have to declare as income any money you give them; gifts such as this are generally tax-free to the recipient.
Bear in mind, though, that your first priority should be to ensure your finances will always be adequate to meet your own future needs. Many retirees make the mistake of underestimating their own requirements, giving too much to the kids and then suffering hardship.
So make sure you allow for a margin of safety in the midst of your generosity.
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