Why can tax arise on assets that the family has not sold?
Asset Values on a Final Tax Return. Canadian tax guidance, practical records to gather and questions to resolve before preparing your return with Arsen Accounting.
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After a loved one passes away: 10 executor tax questions · Browse the 100-article collection
The direct answer
On a passing, capital property is generally treated as disposed of immediately beforehand at fair market value, subject to exceptions. This deemed disposition can create a gain even when the family keeps the asset. The calculation needs historical tax cost as well as date-of-passing value. Cash available to pay the estate’s obligations may therefore differ from the taxable result.
Create an asset list before calculating gains
List investments, real estate and other relevant property with ownership, acquisition information and values at the date of passing. Identify assets held jointly or transferred to particular beneficiaries. An estate's cash balance cannot explain all potential tax consequences. The preparer needs to assess the applicable deemed-disposition and transfer rules for each asset.
Keep value evidence and later sales separate
A later sale price can be useful information, but it is not automatically the value on the earlier relevant date. Retain statements, appraisals and sale documents with their dates clearly labelled. Record selling costs and any changes in ownership separately. This helps distinguish the final-return position from subsequent estate income or gains.
What to gather before the review
- Asset inventory and ownership documents
- Cost records and date-of-passing valuation support
- Beneficiary designations and later sale records
Is tax only relevant when the executor sells an asset?
No. A deemed disposition can create a tax issue without an actual sale. Review the asset and any applicable transfer exception before assuming that retaining it postpones all tax.
Your next step
Obtain cost records and reliable valuations for investments, real estate and other relevant capital property.
Related reading
Official sources
Sources checked for this collection on October 28–29, 2026. Annual forms may refer to a specific tax year. Use the rules and limits for the year being filed. General information; eligibility, elections and deadlines depend on the facts. No deduction or tax saving is guaranteed.
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