Rebate on Sale CRA implications

[nubiwan]

Buyer wants to offer me full price on sale with a side agreement offering a rebate of $15K for repairs and renos- plus some moving expenses. He is doing this to be able to put 20% down, using my rebate.



How can we structure to saisfy my tax implication? Either get a receipt for the work done, or reference the new price in the side agreement.



For instance, what if I offered to pay the buyers moving expenses, as part of my agreement of sale? The payment would bemade subsequent to the sale, and outside of the agreement of purchase andd sale (perhaps referenced within as a condition). Am I able to submit that as a business expense?



In the end, I want to make sure I can submit a true indication of my selling price to CRA when the time comes.

 

[nubiwan]

Since I never got the quick answer I wanted from the forum, I decided to call CRA directly and asked them what their requirement would be in such a situation.



The answer: My side agreement simply needs to reference the buyers name, house sale price, the rebate amount, and that is it.



I asked the CRA representative if this requirement was actually written somewhere, she said not really. Would have been nice to have a ruling in print.



She went on to say it is only required in the event of an audit (well, isn't that the whole point), so just keep a copy of all agreements and rebates pertaining to the sale.



Has anyone else done something similar to this????

 

[moparcanuck]

The only addition I can offer is that the side offers (such as paying moving expenses) would likely not count as 'expenses', but rather as an outlay for disposing of the asset, which would reduce the capital gain. IE, you paying moving expenses would not be something you would normally do in the course of business (for rental) but did instead for getting the deal to sell the asset.