Does property automatically roll over tax-free to my spouse when I die?

By default, yes for most capital property — when you leave property to your surviving spouse or common-law partner, or to a qualifying spousal trust for their benefit, the Income Tax Act automatically rolls it over at your original cost rather than triggering the deemed disposition that would otherwise apply at death. That defers the capital gains tax rather than eliminating it; your spouse, or the trust, takes over your cost base, and tax is generally triggered later when they eventually dispose of the property or die themselves.

"Automatic" doesn't mean there's nothing to think about, though. The rollover only applies where the property actually passes to a spouse or a trust that meets the spousal trust conditions, and your estate can choose to elect out of it, asset by asset, if there's a reason to report the gain on the terminal return instead — for example, to use up capital losses that would otherwise go unused. Because the default rollover isn't always the most tax-efficient outcome for every asset, it's worth reviewing with an advisor as part of estate planning rather than assuming it always applies exactly the way you'd expect.