The tax on an inherited Alberta house

Canada has no inheritance tax, so nothing is owed simply for receiving a house. What is taxable is the change in the property's value — and the clock that matters started on the day the owner died, not on the day the estate finds a buyer.

That single fact reorders most of the decisions an Alberta executor makes. It decides which tax return the bill lands on, whether a slow administration is quietly costing the estate money, and whether selling below an appraisal is a loss or a lever.

There is no inheritance tax. There is a deemed sale.

The Canada Revenue Agency's wording is blunt: when a person dies "they are considered to have sold all their property just prior to death, even though there is no actual disposition or sale." The deemed proceeds are the fair market value of the property on the date of death; subtract the adjusted cost base and you have a capital gain or loss for the deceased's final return.

The consequence that catches people out is what happens next. Once that deemed sale has happened, the property's cost for whoever holds it afterwards — the estate, or a beneficiary — becomes the date-of-death value.

Whatever the deceased paid for the bungalow in 1974 stops mattering the moment they die.

That is the most common error in what is written about inherited houses, including on pages that rank well for it: worked examples starting from the original purchase price, producing a frightening number that does not apply. Confirm your own figures with your accountant — the arithmetic below only works if the starting value is right.

The taxable number is the gap between two dates

Swipe the table sideways →

Sell soon after the death into a market that has not moved, and the second number is close to nothing. The gap is what a long administration creates — and Alberta estates routinely run long, with the grant, the clearance certificate and a family decision all queued behind each other.

That cuts against the usual advice to take your time. Holding an empty house for two years is not a neutral act: it runs up vacant-home insurance, property tax and utilities, and if values rise it builds a taxable gain that would not have existed had the house sold in month three. If values fall, the loss section below matters instead. Either way the calendar decides it, not anything the executor negotiates at closing.

Setting the date-of-death value is a job, not a guess

Everything above depends on a number the estate asserts and CRA may later test. It deserves more care than it usually gets.

A written appraisal from an accredited appraiser, dated to the date of death, is the strongest evidence and the cheapest insurance. A realtor's comparative analysis is weaker but beats nothing. A remembered property tax assessment is barely evidence at all — Alberta assessments are prepared for municipal taxation on a legislated valuation date, not for the day someone died.

One point worth being direct about, since we are a buyer and not a neutral party: an as-is cash offer is not the same thing as fair market value for tax purposes. Our offers price in condition and certainty and the fact that no work gets done before closing, and we set out how we build that number rather than leaving it implied. An estate that treats a cash offer as its date-of-death valuation is likely understating the value — which lowers the final-return gain and raises the estate's. Get the valuation from someone with no stake in the sale.

The rate change most articles still warn you about was cancelled

Here a large share of the current search results are simply out of date, in a direction that scares readers for no reason.

In June 2024 the federal government proposed raising the capital gains inclusion rate from one-half to two-thirds on gains above $250,000. In January 2025 it deferred that change to January 1, 2026. On March 21, 2025 it cancelled the increase outright. The one-half rate stands.

The stale pages are easy to spot once you know: anything urging you to sell before the end of 2025, or describing a two-thirds rate arriving in 2026. Even CRA's own tax tip on the proposed changes still reads as though the 2026 date is live, while stating the agency has "reverted to administering the currently enacted capital gains inclusion rate of one-half."

So half of a capital gain goes into income, and that half is taxed at the estate's or the deceased's own graduated rate. There is no separate flat "capital gains tax rate," which is the other thing search results imply. Ask your accountant what rate the estate actually lands in, before the sale rather than after.

Selling for less than the date-of-death value can cut the final bill

If the house sells for less than it was worth on the date of death, the estate has a capital loss. Left alone, a loss sitting in an estate is often worth very little, because the estate has no other gains to apply it against.

There is a specific rule for this. CRA's guidance on net capital losses for a deceased person says that in the first tax year of a graduated rate estate, "or first three years if the date of death is after August 11, 2024, the legal representative can elect to treat all or part of these losses as losses of the deceased person on the final return."

Two things about that sentence matter more than they look.

• The window used to be one year and is now three, for deaths after August 11, 2024. Most articles on inherited property still describe the old one-year rule, so an executor working from them may think a door has closed that is still open.
• It is an election, with paperwork — the estate's T3 return plus a T1-ADJ to amend the final return. CRA notes the loss cannot be applied to any year before the year of death.

The practical version: an offer below the date-of-death appraisal is a conversation to have with the accountant before accepting it, not at tax time. It does not make a low offer a good one. It does mean the after-tax gap between two offers is not always the gap on the page.

What the executor is personally on the hook for

Tax on the sale is the estate's. The risk of getting it wrong is partly the executor's.

Before distributing anything to beneficiaries, the legal representative should have a clearance certificate. CRA is explicit about the alternative: distribute estate property without one and, if amounts are still owing, "they are personally liable for unpaid amounts, up to the value of the amount of assets distributed." The agency acknowledges a request within 45 days and says the assessment can take up to 120 days once it has everything.

So the order of operations is sell, file, clear, then distribute — several months of administration after the house is gone, and the step families least often budget for. What a grant does and does not let an executor do beforehand is set out in our guide to selling a house before probate in Alberta.

Take the specific numbers to your own accountant, and the executor's exposure to your own lawyer.

When selling as-is is the wrong answer here

We buy houses in Calgary and across Alberta, frequently from executors, and there is a version of this where we are not the right call.

If the house is in decent shape, the estate can carry it, and the beneficiaries agree on the plan, a normal listing will usually net more than any as-is offer, ours included. An executor owes the beneficiaries a proper price, and that duty is not discharged by taking the most convenient offer. If they have not all agreed in writing, that is the first job, not the sale.

The as-is route earns its keep in the narrower case: a house needing more work than the estate can fund, an executor administering it from another province, a property that will not survive a buyer's financing inspection, or beneficiaries who would rather have a firm closing date than the last few percent. Our four steps and what an inherited house in Calgary usually involves are both written out, and we buy across Alberta as principals rather than listing for anyone.

If you take one thing from this page, take the boring one: get a dated valuation now, before anything else happens. It fixes the number every later calculation depends on, and it is the step that gets harder the longer you leave it.