Capital gain is the profit you make on the sale of property, either personal property like stocks and bonds or real property like real estate. The costs of acquiring and disposing of the property are deducted from the profit and a pre-set portion of the balance is included as taxable income. As if that's not complicated enough, the CCRA applies special rules to calculate the inclusion rate if you disposed of property in more than one period. The most significant other exemption is one's home or principal residence.
Capital gains is usually payable when the property is sold or inherited.
If your estate's responsibility for capital gains could force your heirs to sell the property to pay the taxes, you may want to consider a few alternatives to help them keep the property. Transfer to a surviving spouse is exempt from capital gains and the tax is deferred until that spouse's death. This only delays the inevitable though, unless property values are on the way down or have stalled. You may be able to minimize the tax faced by your estate by selling or gifting ownership of the property to your children or grandchildren now. No cash will necessarily change hands, even though the property is deemed sold at fair market value.