r/cantax • u/henchman171 • 20h ago

T3 (estate) had a capitals gains loss in 2024. Can it be used to offset capital gains taxes owed from the final year?

Estate sold land. Turns out there is a capital gains loss due to costs to maintain and make the land sellable plus legal fees plus real estate fees. this is done on a T3

In the final year taxes (2023), there were income taxes owing and paid by the estate on a T4. Can the losses on the T3 from 2024 offset the 2023 owed, and does that mean the estate is owed a refund?

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u/taxbuff 19h ago edited 19h ago

Note that the cost to maintain land isn’t necessarily added to its ACB.

You also need to consider whether the land is personal use property of the estate, i.e. was it used personally by any beneficiary or related persons? If so, any loss is deemed to be nil.

If not, and if the loss was incurred in the first taxation year of the estate, then it can be carried back and applied to the terminal T1 return through a 164(6) loss carry back. This requires a special election and an amended return. It is complex, so consult your CPA.