Keep it in the family and capital gains - a question....

[nubiwan]

ority="39" Name="toc 8"/>































miHidden="false"
UnhideWhenUsed="false" QFormat="true" Name="List Paragraph"/>



























ent 3"/>





























UnhideWhenUsed="false" Name="Medium Shading 2 Accent 5"/>



























"true" Name="Book Title"/>









My father in law is arranging finance on the
house I am buying. I am sort of at my limit as mortgages go. Can he
put mine or my wife's name on the deed, or does it have to be whoever is named on the mortgage. I plan to take the house back in 12-24
months, but am concerned I would trigger a capital gain at that time if the
property changes hands.



Basically, value
today is $215K. In 1-2 years, and all my
renos, probably over $400K. CRA would probably want a sniff if we don't do this right.

 

[coolaj]

If you save all of your receipts -> then this can be added to the price of the house and hence reduce the capital tax



Short answear: see accountant



Long answear: if your father-in-law puts your wife on title, probably she has to declare all of her assets to the mortgage company. If she does not have anything -> it is not an issue. Since his name would be on the title anyway -> technically you will still be on the hook for 1/2 of the capital gains. If you want the safest way: put your father in law, yourself and your wife on title. Then it 2/3 of capital gain is free, the other 1/3 -> you can deduct 1/3 of the cost of materials.

 

[Thomas Beyer]

Differentiate between legal and beneficial ownership.



You could both be on title legally, to get a mortgage.



You own it beneficially and thus, pay no capital gains tax if sold - assuming it is your residence, of course. If it is a rental you have to declare the gain eventually, upon sale.

 

[nubiwan]

I don't want to avoid paying the capital gain, I just don't want to trigger a gain if I buy the house back from my father in law in 2 years time. That is, pay out his mortgage with my own, and perhaps change the name on a deed. Can I simply buy him out at the face value of the mortgage I owe him, then pay my gain later if/when I dispose of the property.

 

[Thomas Beyer]

[quote user=nubiwan]Can I simply buy him out at the face value of the mortgage I owe him, then pay my gain later if/when I dispose of the property.


As stated, you need to differentiate between legal and beneficial ownership.



The best is to own the properties jointly.



You could also get a trust agreement that states that you are the beneficial owner even if only your father is on title, but the ban may still insist you to be on the mortgage.