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This forum is quite helpful but I have not been able to find an answer to my question.

I am the estate trustee and am managing an estate in which the only real asset is Home which was the principle residence for the Deceased. There are two beneficiaries, lets call them B1 and B2. which are Children of the deceased. The home is the primary residence of one of the children and has been since 2001. The deceased died in 2009 and the home was transfered to B1 who then Paid b2 his share of the Estate in Oct of 2010.

I understant the there is no capital gains up to the date of death as this was the deceased primary residence. The value of the home from 2009 to the time of transfer increased in value by lets say by $50,000.00. Since the Home was transfered this triggers a deemed sale at FMV at the time of transfer. B1 does not pay any Capital gains as the home is B1's primary residence, What about B2? I.e when the Home is designated the Trusts primary residence by filling out form T1079-DESIGNATION OF A PROPERTY AS A PRINCIPAL RESIDENCE BY A PERSONAL TRUST.

Does this also exempt b2 from paying capital gains on b2's share of the $50,000.00 ?
 

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IANAL but I don't think so. This seems to be the same as putting a house in joint title where only one of the title holders is resident. The non-resident pays capital gains on their share.
 
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