My_question_is: Canadian-specific
Subject: Transfering of title to prevent taxation
Expert: taxman at centa.com
Date: Monday June 26, 2006
Time: 11:20 PM -0700
QUESTION:
My name was added onto the title of my parent's home when my father passed
away 3 years ago. We did this to manage the estate as we did not have
confidence in our elderly mother.
Now I'm moving to the US permanently and am hoping to not have to pay the
capital gains tax on my portion of the house. I've been told to remove
myself from the title and claim that I never owned an interest and that I
was on title soley for estate purposes.
Will this work and how do I actually do this?
Thank you for your time.
----------------------------------------------------
david ingram replies:
I see no reason to remove yourself if in fact you do not "own" the house but
are merely there as a trustee. If that is the case, it should and would (in
my opinion) survive US tax as well.
If it is not true, than you will owe tax on any capital gains when you
remove your name now.
There are many differences of opinion on this by the way. I am one of the
people who think that you can be on title for estate / probate purposes and
not be subject to capital gains tax. I prefer that a separate document is
prepared that states this fact and if one of the children has a spouse, the
spouse should also sign off any possible claim that they might have in the
case of a divorce, etc.
some believe that if the joint tenant does not have a real interest in the
property, it is not a legitimate joint tenancy and I understand their
position. However, I have not seen this challenged by the CRA since Capital
Gains Tax was announced on June 17, 1971.
I do admit the possibility however and if anyone else has a different answer
because of an actual tax case or advance ruling by the CRA I would
appreciate being informed.
And you know where to send your first cross-border tax returns when you do
leave.
--------------------
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are all handled with competence & authority.
Phone consultations are $400 for 15 minutes to 50 minutes (professional
hour).
This is not intended to be definitive but in general I am quoting $800 to
$2,000 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you
lived in one country only - no self employment or rentals or capital gains -
you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 would be the minimum with a move in or out of the country. These are
complicated because of the back and forth foreign tax credits. - The IRS
says a foreign tax credit takes 1 hour and 53 minutes.
$1,500 would be the minimum with a rental or two in the country you do not
live in or a rental and a business and foreign tax credits no move in or
out
$2,000 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection
period) with a three or four slips and no capital gains, etc. for $125.00
up.
With a Rental for $300
A Business for $300 - Rental and business likely $400
And an American only (lives in the US with no Canadian income or filing
period) with about the same things in the same range with a little bit more
if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS
be $400 and up.
TDF 90-22.1 forms are $25 for the first and $10.00 each after that when part
of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales) are likely $50.00 for the first and $20.00 each after
that.
Just a guideline not etched in stone.
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