Selling a Cemetery Plot: Do You Owe Capital Gains Tax?

Taxes on the sale of a cemetery plot

As urban land becomes scarcer and property values rise, the price of cemetery plots has increased in some markets. In major cities, a burial plot can represent a meaningful dollar value, and that raises reasonable questions about tax and estate implications when a plot is part of a deceased person’s assets.

Most personal, non-investment items tend to depreciate over time — things like cars, furniture or household goods normally fall in value and are not a typical source of capital gains. However, certain personal-use property can appreciate, and when it does, capital gains rules can apply. Examples include collector items, artwork or other valuables that increase in value beyond their original cost.

To determine whether a capital gain must be reported, there are a few basic rules to calculate gains or losses on personal-use property:

1. If the adjusted cost base (ACB) of the property is below $1,000, the ACB is treated as $1,000 for reporting purposes.
2. If the sale proceeds are below $1,000, the proceeds are treated as $1,000.
3. If both the ACB and the sale proceeds are below $1,000, there is no reporting requirement.

Capital gains on personal-use property

Because of those rules, most personal-use items do not create taxable capital gains unless the amounts involved are material. For a cemetery plot, the key points to consider are how the plot is legally held and what values apply at the time of the owner’s death and at the time of sale.

When someone purchases a burial spot, they usually acquire interment rights rather than fee simple ownership of the land itself. The buyer becomes an interment rights holder — the right to be buried or inter someone in that space — but not the owner of the ground. Practically speaking, those interment rights can still have resale value to heirs or to others who want that location, and that market value is what would be relevant for tax purposes.

At the moment of death, the deceased’s assets are generally treated as if they were disposed of at fair market value. That deemed disposition can trigger capital gains or losses based on the difference between the property’s adjusted cost base and its fair market value at death. In other words, if the cemetery plot had appreciated relative to what was paid for the interment rights, a capital gain could be deemed on the deceased’s final tax return.

If you, as executor, sell the plot soon after the death, the sale price is likely to be similar to the value used in that deemed disposition. A subsequent increase in value between the date of death and the actual sale could create a small capital gain for the estate, though such changes are often modest unless market demand shifts quickly.

Selling a cemetery plot as part of an estate

There are practical and legal considerations beyond taxes when selling a cemetery plot. Because the purchaser holds interment rights rather than land ownership, cemeteries often have their own rules about transfers and private sales. Some cemeteries allow interment rights to be sold privately, others require sales to be handled through the cemetery’s office, and some restrict transfers entirely. Check the cemetery’s policies and any agreements tied to the plot before attempting a sale.

Because the plot has monetary value, it may also be included in the estate for probate or estate administration tax calculations, just like other assets that pass through probate. That means the estate’s executor should account for the plot’s value when preparing estate inventories and when filing for probate, if applicable in the jurisdiction.

Practical steps for an executor in this situation include:

• Confirm how the interment rights are documented and whether the cemetery permits a private sale or transfer.
• Obtain a fair market valuation or comparable prices for nearby plots so you can properly record the asset’s value for the estate and tax reporting.
• Keep clear records of the value at the date of death and the final sale price to determine whether a capital gain arose between those dates.
• Consult a tax professional or an estate lawyer if the value appears significant or if you are unsure about reporting or probate requirements.

Read more about capital gains:

• How much is capital gains tax in Canada? — and other reader questions answered
• How it works: Capital gains tax on the sale of a property
• How real estate is taxed during a separation or divorce
• Federal Budget 2024: How it will affect Canadians’ finances and taxes