Help with deceased taxpayer in 2017.

Client died in 2017. Widow. NOA received. TX19 not applied for. Principal Residence sold/closed in Jan18. In 2018, client received a T5 Slip for Interest < $200. What needs to be done now? There was a Will and Probate passed. Funds from sale of home have been distributed to beneficiaries?

Answer

I'm not sure from your question if the widow is the one who died. Assuming it was her, then she would have been the last person occupying this as a principal residence (see next paragraph) and the subsequent sale of the house by the estate should have been recorded on a T3 Trust return as a disposition and any taxes paid on the capital gain if there is one. The T5 for the interest received would go on that same T3 return.

One hopes that the beneficiaries are a compatible bunch because the executor is on the hook for any taxes owing by the estate. Those funds should not have been distributed to the beneficiaries, or at least not the full amount without some reasonable holdback, until the TX19 request was approved by CRA. This might not be a big issue if there is no gain on the subsequent sale of the house. Note that there is a clause in the ITA allowing for a trust to maintain the house's status as a principal residence of the estate, but this requires occupancy by a specified beneficiary until it is sold. The $200 T5 is not that big of an issue, but it will still result in taxes payable of about $40 if this is a graduated rate trust.

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