My question is: Canadian-specific
QUESTION: Five years ago this Aug my husband and I helped our son buy a
townhouse in AB. We helped out with the downpayment is all. Our son was
unable to qualify for a mortgage at the banks so we put the townhouse in our
names with the full intent that it belonged to our son. He has made all the
payments. Now we would like for him to have the house in his name and he be
sole owner. Will we get dinged for capital gains? We are simply
transferring title, no money exchanges.
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david ingram replies:
If you did not try and write off a rental loss on your tax return and there
was an original application for a mortgage in his name, it should just go to
your son without tax. It was held in your name "in trust".
However, it would have been nice if the lawyer looking after this for you
had prepared a simple document to that effect at the time.
The following Q & A might also help -
------------------
My question is: Canadian-specific
QUESTION: I bought my house in 1980 for 80,000 but in the early 80's due to
high interest rates got into financial problems. My father took over and
paid off the mortgage and put the property in his name to protect his money.
A few years later he added my name as joint owner. This house has always
been my principal residence and I have paid all taxes and expenses. When my
folks passed on two years ago I became the sole owner. My question to you .
Will this trigger a capital gains issue? The property is now worth 300,000
dollars. Thanks for your input.
---------------------------------------------------------------------------
david ingram replies:
I would claim he house was always yours. You bought it and father took it
into his name in trust to keep it for you. You continued to pay the upkeep
and the taxes as an owner would in what is called a constructive trust.
Remember that term because if the CRA wanted to tax your father's estate on
the value of the house, you would need to claim and prove the constructive
trust to make your point.
Make sure you keep all the records of your paying the property taxes and any
receipts for upkeep, maintenance, repairs or other bills involving the
house.
If some of them have disappeared, start a 3-ring book now with the ones you
do have and then make up a sheet and make a hundred copies.
The sheet / form you will make will say something like the following:
------------------------------------------------
Date ______________________________
Repairs ___
Taxes _____
Improvements ________
Other ______________________
I remember spending $_______________ on or about ______________.
The payment was for ______________________________
and I paid it to: _________________________________________
_________________________________________
_________________________________________
by cash ___________ cheque _______________ Barter ______________ Other
______________________
Signed __________________
=========================================
If you make these up when you remember something you will sometimes be able
to go back to the business and get a receipt but more importantly, it will
document your constructive trust.
You can read about them at;
http://www.lawyerport.com/term/C/constructive-trust-627.asp
The following has Part I
http://shelburne.butterworths.co.uk/truststaxestates/articles/dataitem.asp?I
D=10312&tid=7
and Part II
http://shelburne.butterworths.co.uk/truststaxestates/articles/dataitem.asp?I
D=14223&tid=7
hope this helps
David Ingram's US/Canada Services
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