Real Estate

Couple owns a property each before marriage

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  • Jun 22nd, 2019 9:46 pm
[OP]
Jr. Member
Mar 14, 2004
183 posts
19 upvotes

Couple owns a property each before marriage

Hello everyone,

We just want to get understand few things before we start planning our financials.
We both owns a property, what happens when we both get married and sign doc at city hall?
Do we have to list one property as income/rental? or I can move my parents into one without claiming it as rental.

Thanks in advance for your input.
13 replies
Jr. Member
Oct 21, 2013
143 posts
43 upvotes
Brampton, ON
ChinBoi wrote:
Jun 14th, 2019 5:52 pm
Hello everyone,

We just want to get understand few things before we start planning our financials.
We both owns a property, what happens when we both get married and sign doc at city hall?
Do we have to list one property as income/rental? or I can move my parents into one without claiming it as rental.

Thanks in advance for your input.
do you mean each of you have your own property ? so two properties in total ? Or do you guys own 1 property together and now wondering what happen to it after marriage ?
Full Service and Rebate Realtor
Serving Kitchener/Waterloo/Cambridge/Elmira/Guelph and surrounding cities
Sr. Member
Mar 3, 2018
842 posts
619 upvotes
GTA
A couple can only claim one principal residence exemption. Thus the other property becomes subject to capital gains tax when sold. Best to get an appraisal on the other property to establish a cost base at the time of marriage. Whether it is a rental, vacant or parents living there does not exempt it from capital gains tax.
Newbie
User avatar
Feb 19, 2019
87 posts
60 upvotes
Stouffville ON
Is your question regarding tax and principal residence, or you are asking about matrimonial home and legal perspective?

Essentially what Davethedude said, but just to clarify it for you a bit more you don't necessarily have to get married, the same rules apply to people who are common-law partners as married couples (from the principal residence point of view).

Once in the relationship the property that will be commonly occupied by you and your partner will be your principal residence, the other property will be deemed to be disposed at market value, new cost base equal to MV will be established, and will have to be reported on the income tax of the property owner on schedule 3 and form T2091. There will be not capital gain tax to pay at the time and what you do with the property is up to you. When you dispose it again it will trigger capital gain tax.
Full Service / Rebate Realtor.
[OP]
Jr. Member
Mar 14, 2004
183 posts
19 upvotes
Amazing, thanks everyone for your input. Now to throw a curve ball and add more detail. I bought my property with my dad before I met my fiance, after few years we (fiance n I) decided to buy a property together. We live separately but I have my name on both property. So if we move into new property and my dad still live at the first property... Am I still liable (tax) for the first property?
Deal Addict
User avatar
Jul 4, 2006
3020 posts
426 upvotes
ChinBoi wrote:
Jun 15th, 2019 9:18 pm
Amazing, thanks everyone for your input. Now to throw a curve ball and add more detail. I bought my property with my dad before I met my fiance, after few years we (fiance n I) decided to buy a property together. We live separately but I have my name on both property. So if we move into new property and my dad still live at the first property... Am I still liable (tax) for the first property?
yup. Why wouldn't you be? Your name is on title? Objectively, you are entitled to a portion of it so yes you should pay taxes on the capital gain.
[OP]
Jr. Member
Mar 14, 2004
183 posts
19 upvotes
Thanks wingman, so let me get this straight... I wouldn't need to pay anything until I sell the property even if I own 2 property.
Newbie
User avatar
Feb 19, 2019
87 posts
60 upvotes
Stouffville ON
quote=ChinBoi post_id=31053238 time=1560647924 user_id=12344]
Amazing, thanks everyone for your input. Now to throw a curve ball and add more detail. I bought my property with my dad before I met my fiance, after few years we (fiance n I) decided to buy a property together. We live separately but I have my name on both property. So if we move into new property and my dad still live at the first property... Am I still liable (tax) for the first property?​
[/quote]

Please clarify further:
- the property you purchased with your dad, was this your primary residence? what is your share of ownership? did you reside there?
- when you purchased the second property with your fiance, did you continue to reside at the house you own together with your house?
- the new property, is that the one you purchased previously with your fiance?
Full Service / Rebate Realtor.
[OP]
Jr. Member
Mar 14, 2004
183 posts
19 upvotes
-The property I bought with my dad is where I live, I believe it's 50-50.
-When I bought the second property, I still live at the first property.
-Yes, the new property I bought with my fiance
Newbie
Jun 2, 2019
6 posts
ChinBoi wrote:
Jun 19th, 2019 11:17 pm
-The property I bought with my dad is where I live, I believe it's 50-50.
-When I bought the second property, I still live at the first property.
-Yes, the new property I bought with my fiance
1. What taxes are you worried about? Property tax has to be paid regardless. It will be the same what you do now.
2. Capital Gains tax - as advised earlier, you are liable when you sell it (for your share - 50%)
3. If there is no rental income, you don't have to pay for it.
Newbie
User avatar
Feb 19, 2019
87 posts
60 upvotes
Stouffville ON
The first property co-owned with your dad – it is your primary residence, there is no capital gain tax when you dispose it. When you move to your new property with you fiance, the portion of the ownership you have for the house with your dad will be a deemed disposition (even if you don’t sell, it will be treated as a sale by cra), the market value at the time of deemed disposition will be your new cost base, when you sell it in the future the capital gain will be calculated based on the difference between the selling price and the FMV when you changed the use from primary residence.

Second property owned with your fiance – it will became your primary residence when you move there, at that time there will be a change of use and a deemed disposition, you will need to report it on your tax return and it will be a taxable event, your capital gain will be based on the difference between the MV at the time of deemed disposition, and the cost base of the property. The new cost base of your new primary residence will be the same as MV of deemed disposition (plus any legal fees etc if applicable).
Full Service / Rebate Realtor.
[OP]
Jr. Member
Mar 14, 2004
183 posts
19 upvotes
Wow, seems really complicated with the second property. I have been doing my own tax every year but looks like next year I will have to get a professional to do it.

Thanks to everyone!!
Newbie
Oct 27, 2018
86 posts
37 upvotes
DaveTheDude wrote:
Jun 14th, 2019 8:22 pm
A couple can only claim one principal residence exemption. Thus the other property becomes subject to capital gains tax when sold. Best to get an appraisal on the other property to establish a cost base at the time of marriage. Whether it is a rental, vacant or parents living there does not exempt it from capital gains tax.

So sell one before marriage? If you do that, what happens to the other one? Can the couple can claim full PRE of the other after marriage?
Sr. Member
Jun 7, 2017
659 posts
477 upvotes
I think you should sell and start clean.

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