Capital gains Appraisal

There are some assets that the government considers capital property, namely stocks, investment shares, and real estate. Stocks and similar assets are relatively simple. You (or someone who you inherited them from) bought shares for a certain price on an exchange. When you sell those shares, it’s simple to calculate the difference in the purchase price and the sale price and use that amount on your annual taxes.

Many real estate gains are straightforward as well. If you buy a home and then sell it five years later, the profit you made on the sale is the capital gain you have to report. In Canada, you’ll report 50% of your net capital gain for the year as income, subject to the same tax rate as the rest of your income. When you’ve been given or inherited property, that’s when the value of the property comes into play in the context of capital gains.

Let’s say you inherit property as part of an estate. In some cases, an immediate sale of this property excludes you from claiming the proceeds as a capital gain. In most cases, you’ll have to add half of these proceeds to your income.

The problem is that you only have a record of what you sold the property for and not what was originally paid for the property. With capital gains, you have to calculate the profit of what you sold property for in comparison with the price you paid to acquire it. But in this case, you didn’t buy the property in question—it was passed down to you.