For many Canadians the majority of their wealth is held in personally owned real estate. For most this will be limited to their principal residence however, investment in recreational and real estate investment property also form a substantial part of estates. Due to the nature of real estate, it is important to do estate planning to realize optimum gain and minimize tax implications.
Key Considerations for Real Estate Investment
What you Need to Know About Capital Gains Taxes
Why is Estate Planning Important?
It is recommended that family issues (including estate equalization) be addressed with certain types of real estate assets. Estate planning can organize your assets with the objective to ensure that at your death they are distributed according to your wishes:
Tax and Estate Planning Strategies for Various Real Estate Holdings
Real Estate Investment Property
Solving the Liquidity Need
As discussed, the majority of the taxes resulting from the disposition of real estate upon death can be deferred until the demise of the surviving spouse. The same is true for most of the estate equalization considerations with the family. The most cost effective method in providing the necessary liquidity in these situations is the use of second-to-die joint life insurance. This vehicle provides tax free cash at the second death. Naming a beneficiary bypasses the will and is not subject to probate. In addition, the proceeds are protected against creditor claims. Insurance provides for a guaranteed low cost alternative to the issue of satisfying the liquidity need at death.
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