Looking at my 96 year mother's Investment accounts, when she passes away, the estate is going to get nailed with this new capital gains tax. My mother is a buy hold type of investor having some stocks for 30 plus years.
Then you add cottages into the mix look out scout the estate is going to get nailed. Am I correct?
If the so called generation that was to receive a vast fortune with this new rule will be getting a lot less is this correct?.
In my case I am 68 have 1.5 million in a RRSP's and 2 million in cash. I receive 4 indexed pensions and have zero debt
Would it be wise in my situation (and others in this situation) to start withdrawing form my RRSP and setting up accounts for my children. Also start selling my mother's stocks that are up 300%, before this new budget become law.
Your comments and possible suggestions would be greatly appreciate.
Thanking you
Mike
As you know, we can't get personal, but we can offer these comments:
1) Upon passing away, an estate is deemed to have sold everything at the date of death. The 66.7% capital gains inclusion will apply for any sale after June 25. Individuals get the first $250,000 gains at the 50% inclusion rate, but if someone has real estate assets this will quickly be surpassed. Principal residences remain tax free, whether in an estate or not. 2) At 71 an RRSP has to be converted into an RRIF, so at 68 there is only three years if one wants to withdraw early. Income from RRSPs and RRIFs are taxed as income, so capital gains are less of an issue here, but total income may be. The best strategy is to withdraw capital when one's tax rate is low. This may or may not be early, depending on the situation. 3) If one has the income and the capacity, some taxpayers no doubt will NOT sell assets, and borrow against them, on the hope that the 66.7% gets reversed back to 50% one day. Debt of course adds risks, and not many taxes ever go lower, but this is at least within some possibility of occurring with a new government. 4) 'Cash' is taxed at the highest rate, so one strategy is to buy dividend stocks or stocks with the potential for capital gains, both of which will be taxed lower, for most investors. An ETF such as HSAV may be of interest, offering a cash-equivalent but with no distributions, so 'cash' is taxed as capital gains.