Real Estate

Buying second property - investment & taxes

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Sr. Member
Dec 19, 2010
907 posts
348 upvotes
Toronto, Ontario

Buying second property - investment & taxes

so currently have my own principle residence.

looking to buy a second property, as a long term investment property.
the plan is to let my mother and grandmother live there rent free. so no investment income. it's really an a place for them to live but i guess it doubles up as a long term investment?

question is, is there any taxes or benefits which i could write off as negative equity since i will have no investment income?
14 replies
Member
Sep 10, 2009
234 posts
113 upvotes
if you're not charging the market rate then you cannot write off expenses.
Deal Addict
Nov 22, 2004
1621 posts
766 upvotes
GTA
jamieee wrote: so currently have my own principle residence.

looking to buy a second property, as a long term investment property.
the plan is to let my mother and grandmother live there rent free. so no investment income. it's really an a place for them to live but i guess it doubles up as a long term investment?

question is, is there any taxes or benefits which i could write off as negative equity since i will have no investment income?
Why not just have their names on the property and make it their principal residence? No tax implications since it's a family member, income or capital appreciation wise.
CPA. Realtor.
Deal Fanatic
User avatar
Dec 24, 2002
7197 posts
2000 upvotes
Clueless Fox wrote: Why not just have their names on the property and make it their principal residence? No tax implications since it's a family member, income or capital appreciation wise.
As long as neither has a principal residence that's exactly what he should do
Deal Expert
Feb 22, 2011
16521 posts
21871 upvotes
Toronto
I don't think you can claim any expenses if you aren't renting the property out. If they are low income you could probably declare them as dependents which would be legitimate if you are housing them at no charge.
Sr. Member
Dec 19, 2010
907 posts
348 upvotes
Toronto, Ontario
by putting their names on the title, it would only avoid capital gains on their percentage though, correct?
if there are 4 owners let's say (2 of which is mother and grandmother) there would still be capital gains on the other 50%? yes?
Deal Addict
Dec 21, 2011
3518 posts
689 upvotes
Allenford
jamieee wrote: by putting their names on the title, it would only avoid capital gains on their percentage though, correct?
if there are 4 owners let's say (2 of which is mother and grandmother) there would still be capital gains on the other 50%? yes?
The suggestion was to put it in their names only. Then you would avoid the issue.
Deal Addict
Aug 30, 2011
3537 posts
1279 upvotes
Ottawa
rjg4235 wrote: I don't think you can claim any expenses if you aren't renting the property out. If they are low income you could probably declare them as dependents which would be legitimate if you are housing them at no charge.
Not unless the OP lives with them. Caregiver amount can be claimed if ... "you (either alone or with another person) maintained a dwelling where you and one or more of your dependants lived..."
Deal Addict
Aug 30, 2011
3537 posts
1279 upvotes
Ottawa
snow00774 wrote: The suggestion was to put it in their names only. Then you would avoid the issue.
I doubt the other 2 owners would be comfortable with that. To the OP, yes, there would still be capital gains for the other 50%
Sr. Member
Dec 19, 2010
907 posts
348 upvotes
Toronto, Ontario
OttawaGardener wrote: I doubt the other 2 owners would be comfortable with that. To the OP, yes, there would still be capital gains for the other 50%
yes, although related, prefer to keep the actual owners who are paying the mortgage on the title.
Deal Addict
Nov 22, 2004
1621 posts
766 upvotes
GTA
jamieee wrote: yes, although related, prefer to keep the actual owners who are paying the mortgage on the title.
Sorry I didn't clarify - but yes, you would be liable for your share of the capital gains tax since it's not your principal residence and your name is listed as an owner.
CPA. Realtor.
Deal Addict
Dec 21, 2011
3518 posts
689 upvotes
Allenford
OttawaGardener wrote: I doubt the other 2 owners would be comfortable with that. To the OP, yes, there would still be capital gains for the other 50%
I was not suggesting, only clarifying previous post.
Deal Fanatic
Jul 3, 2011
6517 posts
3798 upvotes
Thornhill
jamieee wrote: by putting their names on the title, it would only avoid capital gains on their percentage though, correct?
if there are 4 owners let's say (2 of which is mother and grandmother) there would still be capital gains on the other 50%? yes?
It might provided there is no other property owned

The problem with this is that when a property is owned by parent and adult child, the child is deemed to be holding the property in trust for the parent. If the parent dies first it is deemed to become part of the parent's estate and will trigger probate fees if they don;t own a different property.

In this case they'd be a grandparent, a parent and the adult child which can turn it into a nightmare scenario for the actual owner.
Deal Addict
Nov 22, 2004
1621 posts
766 upvotes
GTA
It might provided there is no other property owned

The problem with this is that when a property is owned by parent and adult child, the child is deemed to be holding the property in trust for the parent. If the parent dies first it is deemed to become part of the parent's estate and will trigger probate fees if they don;t own a different property.

In this case they'd be a grandparent, a parent and the adult child which can turn it into a nightmare scenario for the actual owner.
Here's some verbiage on probate fees for OP - make what you will of it. Probate Fees
CPA. Realtor.
Sr. Member
Dec 24, 2007
858 posts
144 upvotes
GTA
what if the parents are seasonal or short-term dwellers? they are non-residents, why bother putting their names on the title. If it's condo I wouldn't expect too much appreciation. Just go traveling
and enjoy the world that year when you sell it.

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