Inherited Property Tax in Canada: What a BC Estate Actually Pays

Canada has no inheritance tax. Run a fairly ordinary East Vancouver estate through the rules anyway and the bill still comes to $61,433: $28,201 of income tax and $33,232 of BC probate fees. The heir doesn't pay it. The estate does, before anyone gets a cheque.

So the tax isn't on receiving property; it's on the person who died, as if they sold everything the moment before death. Whether that costs nothing or a six-figure sum depends almost entirely on one question: was the property their home, or something else?

No inheritance tax, but a deemed sale

The CRA's own list of amounts that aren't taxed includes "most gifts and inheritances". If your mother leaves you $300,000 in cash, you don't report it. Interest you earn on it afterwards is taxable, but the inheritance itself isn't income.

The tax happens one step earlier. Under section 70(5) of the Income Tax Act, in the year someone dies they're treated as having sold every capital property they owned immediately before death, at fair market value. Any gain goes on the deceased's final (terminal) T1 return. The executor files it and pays it out of the estate.

The same section gives the heir something useful: you're deemed to acquire the property at that same fair market value. That number becomes your adjusted cost base (ACB). Say you inherit a condo worth $682,500 at the date of death: your cost is $682,500, however little your parent paid for it decades ago.

Two rules soften the deemed sale:

• The principal residence exemption. If the property was the deceased's home for every year they owned it, the gain is exempt. CRA still wants it designated as a principal residence on the final return, even when the whole gain is covered. CRA also notes the deceased's designation only runs to the date of death.
• The spousal rollover, s.70(6). Property left to a spouse or common-law partner who was resident in Canada (or to a qualifying spousal trust created by the will) passes at the deceased's cost. No gain on the first death. The deemed sale waits until the surviving spouse dies or sells.

The share of a gain that's taxed is still one half. Ottawa had proposed a higher inclusion rate, and the Prime Minister cancelled that increase on March 21, 2025. Section 38 of the Act, as consolidated to October 19, 2026, still says ½. If you read an older article quoting a higher rate, it's describing a rule that never took effect.

Which properties trigger tax at death

Here's how the common situations in a Greater Vancouver family play out. This is the federal side only; probate and PTT come later.

Two points from that table cost families real money.

The cottage. Since 1982 a family unit can designate only one home per year. If the deceased owned a Vancouver house and a cabin, both may qualify as a principal residence, but each year can only go to one of them. The executor and accountant choose which designation saves more tax; the other property's gain is taxed. The CRA's principal residence page spells out the rules.

The rental. If capital cost allowance (CCA) was claimed over the years, the deemed sale can also bring back that depreciation as income (recapture), taxed in full, not at half. The CRA capital gains guide (T4037) covers how it works, and my capital gains post on a Vancouver rental condo has the long version with numbers.

Worked example: an East Vancouver house and a rental condo

This is a hypothetical, not anyone's real estate. I've built it from the Greater Vancouver Realtors September 2026 benchmarks so the values are realistic for today.

A widowed BC resident dies in 2026, between January and October. They leave:

• A detached house in East Vancouver, their home for every year they owned it. Value at death: the Vancouver East detached benchmark, $1,630,500.
• A rental condo, valued at the Greater Vancouver apartment benchmark of $682,500. The apartment benchmark is up 36.8% over ten years, so I've assumed it was bought ten years earlier for $499,000, with $7,980 of PTT and $1,500 of legal fees. No CCA claimed, no mortgages.
• $100,000 in bank accounts and $60,000 of pension and other income in the year of death.

Everything goes to their adult son.

$0$10K$20K$30K$40K

$0

$28K

$33K

Tax on the houseTax on the condoProbate fee

Source: Greater Vancouver Realtors, September 2026 stats package (MLS® HPI benchmarks); 2026 federal and BC tax brackets; Probate Fee Act s.2. Author's calculation

Show the numbers

	Hypothetical estate
Tax on the house	$0
Tax on the condo	$28K
Probate fee	$33K

A few things jump out.

The house, worth more than twice the condo, costs nothing in income tax. The principal residence exemption does all the work. My read: when a family worries that "Dad's house will get hammered by tax", the house is rarely the problem. The rental is.

The extra tax works out to about 32% of the condo's taxable half in this example, because adding $87,010 to the final return pushes it into higher brackets. A death late in the year, after a full year of pension income, or a bigger gain, would push that rate up further.

And probate is not small. At $33,232, it's bigger than the income tax here, and it's charged on the house too. The principal residence exemption does nothing for probate.

The son now owns a house with a cost base of $1,630,500 and a condo with a cost base of $682,500. If the condo was being transferred into his name rather than sold, and he never lived in it, PTT could apply on that transfer at $11,650 at the general rates. More on that below.

BC probate fees: the table

BC charges probate under the Probate Fee Act, current to October 27, 2026. The fee is paid to the government before the court issues the grant. The formula:

• Estate of $25,000 or less: no fee.
• $6 for every $1,000, or part of $1,000, between $25,000 and $50,000. That's $150 at most.
• $14 for every $1,000, or part of $1,000, above $50,000.

So above $50,000, the fee is $150 plus 1.4% of the amount over $50,000 (roughly 1.4% of the whole estate, minus $550). The court filing fees under the Supreme Court Civil Rules are on top.

What counts toward the value matters as much as the rate. The Act uses the gross value of the deceased's real and tangible property located in BC, and, if they normally lived in BC, their intangible property anywhere (bank and investment accounts, for example) that passes to the executor. Gross means the Act doesn't say debts are subtracted; ask the estate lawyer how a mortgage is handled on your file. If an asset turns up after the grant, the executor has to disclose it and pay the difference.

Here's what probate alone would cost if the only asset were a house at today's median asking price in each city. These are EstateBlock's live listings, so they're asking prices of active listings, not sale prices; an actual estate would use the appraised value at death.

Vancouver$38,384Richmond$31,426North Vancouver$30,950Burnaby$28,836Coquitlam$24,482Surrey$21,850

Source: EstateBlock.com live listings, snapshot 2026-11-03 (asking prices of active listings, not sale prices); fee per Probate Fee Act s.2

Show the numbers

Item	Value
Vancouver	$38,384
Richmond	$31,426
North Vancouver	$30,950
Burnaby	$28,836
Coquitlam	$24,482
Surrey	$21,850

A Vancouver house at the $2,780,695 median asking price would mean $38,384 of probate; a Surrey house at $1,599,960, $21,850. Browse what's listed on Vancouver houses for sale on EstateBlock if you want a feel for the comparables your executor's appraiser will look at.

Joint tenancy works differently. When a joint tenant dies, the survivor takes title through a "transmission to surviving joint tenant" application at the Land Title and Survey Authority (LTSA), PTT-exempt under code 08. How that interacts with probate and income tax, especially when a parent added an adult child to title, is a question for an estate lawyer. I wouldn't put a child on title to "save probate" without that advice.

Property transfer tax when title moves to an heir

PTT is charged on fair market value when title is registered in a new name, and an estate usually moves title twice: from the deceased to the executor, then from the executor to the heir or a buyer. The BC government's list of exemption codes covers most family situations:

Three catches.

First, "related individual" in the PTT Act means a spouse, child, grandchild, great-grandchild, parent, grandparent or great-grandparent (plus some in-laws), and for these exemptions that person must be a Canadian citizen or permanent resident. A sibling doesn't count for code 40, and a child who's a foreign national doesn't qualify.

Second, the code 40 exemption is about a home. The rental condo in my example wasn't the parent's residence and the son never lived there, so unless another exemption fits, transferring it to him triggers PTT on fair market value: $11,650 at the general rates on $682,500. If he plans to sell it anyway, selling straight from the estate avoids paying PTT on a transfer to himself first. The buyer pays PTT on their purchase either way.

Third, the cabin exemption caps out at $275,000 of fair market value, so check the cabin's value against that cap before assuming it moves to you PTT-free. A property over 0.5 hectares or not classified residential may also not be fully exempt under code 40. My BC property transfer tax guide has the full rate table and our PTT calculator will run the number for any value.

When the heir sells later

Once the property is yours, it's taxed like any other property you own, starting from the value at death. Selling the inherited condo two years later for more than $682,500? Only the increase since the death is your capital gain (less your selling costs). Selling for less? You may have a capital loss.

That's why the date-of-death valuation is the most important document you'll get out of the estate. It sets the deceased's tax on the final return and your cost base for the rest of your ownership. Too low and the estate pays less now but you pay more later; too high and the reverse. CRA can challenge either. Get a proper appraisal close to the date of death, and keep it.

In a falling market, timing matters. The GVR Vancouver East detached benchmark was down 7.7% year over year in September 2026, and the Greater Vancouver apartment benchmark was down 6.2%. If the property is worth less by the time it sells than it was at death, there's a relief worth knowing: under section 164(6), if the estate itself (a graduated rate estate) sells capital property at a net loss within its first three taxation years, the executor can elect to carry that loss back to the deceased's final return, against the gain that was taxed there. It works for a rental. It generally doesn't help with a house used personally, because losses on personal-use property are nil. The election is the executor's to make and has a deadline, so raise it with the estate's accountant before the sale.

Flipping rules. Both flipping regimes recognise death:

• The federal rule that taxes homes sold within 365 days as business income excludes sales due to the death of the owner or a related person.
• The BC home flipping tax counts an estate's days of ownership as the deceased's days plus the time the estate administered the property. A related heir who sells can count those days too, so the tax only comes into play if the deceased's days, the estate's days and the heir's own days add up to less than 730. Even then, the heir can claim the death of an individual exemption. You must file a BC home flipping tax return to claim it, within 90 days of the sale. Skip the return and you can face penalties even though no tax was owed.

If you move into the inherited home and it becomes your principal residence, the gain from the date of death can be sheltered under your own exemption for the years you live there. My principal residence exemption post walks through the formula when a property was your home for only part of the time.

Selling an estate property, step by step

If the heirs decide to sell, whether to split the proceeds or because nobody wants a second property, here's the order things happen in BC. Timelines vary a lot with the court registry, the complexity of the estate and whether anyone contests the will.

A few notes on the steps that trip people up.

You can't sell before the grant, in practice. The LTSA's transmission guide requires a court-certified copy of the grant of probate or administration before the land is moved into the executor's name, and a buyer's lawyer can't close without a registrable transfer. You can prepare the house, get the appraisal and talk to agents while the application is in, but the closing date has to be after the grant. If the will is being probated, I'd usually wait to list until the grant is issued or close to it, so you aren't holding a buyer on a subject clause for months.

The executor is the seller. The listing agreement and the contract of purchase and sale are signed by the executor in their capacity as personal representative. If there are co-executors, plan for all of them to sign, and agree on a price strategy before you list, not after the first offer arrives.

Don't distribute too early. The CRA's clearance certificate (form TX19) confirms the estate has paid all income tax. An executor who hands out the money without one is personally liable for unpaid tax, up to the value of what they distributed. Holding back a reserve until the certificate arrives is normal, and heirs should expect it.

The final return deadline is April 30 of the following year for deaths between January and October, and six months after the death for November and December.

Not sure what the property is worth before the appraisal? Our home value estimator gives a rough starting point, and the capital gains calculator will show the tax on a rental or second property at different values.

Heirs abroad, property abroad

If the heir lives outside Canada, the deemed sale at death still happens on the Canadian return, and the heir still gets a cost base equal to the value at death. The difference shows up when the heir sells. A non-resident selling Canadian real estate deals with section 116: notice to CRA within 10 days, a clearance certificate, and a buyer's holdback of 25% of the price (50% on depreciable property such as a rental building) if there's no certificate. I've covered that process in non-resident selling property in Canada. And as noted above, BC's PTT exemptions for transfers from an estate require the heir to be a Canadian citizen or permanent resident.

If you live in Canada and inherit property abroad, Canada doesn't tax the inheritance, and under section 69 your cost is generally its fair market value when you acquire it. Your reporting starts there. If you hold specified foreign property costing more than $100,000 at any time in the year, you must file form T1135; property used mainly for personal use, like a vacation home you use yourself, is excluded. Rental income from it is taxable in Canada, and the other country may have its own inheritance or estate tax. This is cross-border accountant territory.

My read

For most Greater Vancouver families the tax that matters on an inherited home isn't income tax. It's probate at about 1.4%, plus the cost of getting the paperwork and the timing wrong. The principal residence exemption usually wipes out tax on the family house; it does nothing for the rental condo, the cabin, or a house that was rented out for years.

If I were an executor with a property to sell, I'd do three things early: get a real appraisal as close to the date of death as possible, line up the grant application before anyone talks about list prices, and decide with the accountant whether the estate or the heir should be the seller. For a rental condo, in a market where the Greater Vancouver apartment benchmark fell 6.2% in a year (GVR, September 2026), that last decision can decide whether a section 164(6) loss carryback is available at all, because only a sale by the estate qualifies.

And if a parent is still alive and asking about this, the conversation is about the will, how title is held and who's named executor, not tax tricks. That's a lawyer's job, and an accountant's for the numbers.

Sources

1. CRA: Amounts that are not reported or taxed (gifts and inheritances)
2. Income Tax Act s.70: deemed disposition on death, heir's cost, spousal rollover
3. Income Tax Act s.69: property acquired by inheritance at fair market value
4. Income Tax Act s.38: taxable capital gain is one half
5. Prime Minister of Canada: proposed capital gains increase cancelled (March 21, 2025)
6. Income Tax Act s.40: losses on personal-use property
7. Income Tax Act s.164(6): estate losses carried back to the final return
8. Income Tax Act s.12(13): federal residential property flipping rule
9. Income Tax Act s.116: non-resident dispositions
10. CRA: Deemed disposition of property when someone dies
11. CRA: Principal residence and other real estate
12. CRA: T4037 Capital Gains
13. CRA: Final return filing deadlines
14. CRA: Clearance certificate (TX19)
15. CRA: Foreign income verification statement (T1135)
16. CRA: 2026 federal tax rates and brackets
17. Government of B.C.: 2026 personal income tax rates
18. Probate Fee Act [SBC 1999] c.4
19. Government of B.C.: After a death, deal with wills and estates
20. LTSA: Transmission of an interest to a personal representative
21. Property Transfer Tax Act, s.14 exemptions and definitions
22. Government of B.C.: Property transfer tax
23. Government of B.C.: PTT exemption codes
24. Government of B.C.: BC home flipping tax
25. Government of B.C.: BC home flipping tax and estates
26. Government of B.C.: BC home flipping tax life circumstance exemptions
27. Greater Vancouver Realtors: September 2026 stats package
28. EstateBlock.com: Vancouver houses for sale (live listings, snapshot 2026-11-03)