The US has a tax treaty with Canada which allows the country where the property
is located to tax any gain on the sale from the property. So your mother will only pay tax on this sale in Canada. See Article VI of the following treaty.
If your mother wants to gift the proceeds to her children, this will likely have no tax consequences.
First, if and when gift tax
is ever due, it is paid by the donor and not by the recipient of the gift. However, under current regulations
, each taxpayer is allowed to give gifts in their lifetime of up to $1 million before any gift tax becomes due. This is part of what is called the Uniform Tax Credit
In addition to the $1 million lifetime exemption, each individual
is allowed to give annual gifts of up to $13,000 to any number of individuals, and those gifts do not even apply towards the lifetime exemption, nor do they need to be reported. Gifts which exceed the annual exclusion of $13,000 must be reported by the donor by filing Form
709 with the IRS
to report the value of the gift. However, no tax is actually due unless that donor has already reached his $1 million lifetime limit. The amount reported then reduces that donor's remaining lifetime balance that he may give in non-taxable gifts
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