The musician known as Prince passed away in April of 2016, but the contentious battle over his estate and assets continues. Aside from numerous individuals proclaiming their lineage with Prince, there are also squabbling relatives arguing over how much the late musician’s assets are worth. It’s been estimated that Prince’s estate is actually worth far less than initial $300 million dollar fortune than it was originally valued at, and to make matters worse, without a Will in place, the estate tax costs are set to rise higher than expected.
One of the more popular tax planning strategies is “income splitting.” To the extent income can be shifted within a family unit from a higher income earner to a lower income earner, less income tax is paid and more after-tax income is retained within the family unit.
The principal residence exemption allows you to exempt from taxation some or all of the capital gains that you realize when you sell a home that qualifies as a “principal residence” – a potentially significant tax savings.