Gifting principal residence to parent

Dynatos wrote: ↑ https://www.fin.gov.on.ca/en/bulletins/ ... %20payable.

If there's no consideration (indirectly or directly) changing hands, then you can skirt around land transfer tax; i.e. if the mortgage is paid off, you should be able to avoid land transfer tax.

For the purposes of federal tax implications, it would be deemed a sale and purchase at fair market value and the associated principal residence rules would apply; i.e., if it's been your principal residence for the entire time you've owned it, and it becomes your parents principal residence, you should also avoid capital gains tax.

I'd consult an accountant and property lawyer for confirmation.

raaaaam wrote: ↑ Looking for advice on this subject.
We have a new build closing in a few months. I was wondering if we can gift our current principal residence (paid off) to my parents to live in. Are there any tax implications? Does a land transfer tax apply? Will the property be exempted from capital gains if they sell it in the future (assuming it will be their principal residence)?

Dynatos wrote: ↑ https://www.fin.gov.on.ca/en/bulletins/ ... %20payable.

If there's no consideration (indirectly or directly) changing hands, then you can skirt around land transfer tax; i.e. if the mortgage is paid off, you should be able to avoid land transfer tax.

For the purposes of federal tax implications, it would be deemed a sale and purchase at fair market value and the associated principal residence rules would apply; i.e., if it's been your principal residence for the entire time you've owned it, and it becomes your parents principal residence, you should also avoid capital gains tax.

I'd consult an accountant and property lawyer for confirmation.

However, if capital property (e.g. real estate, investments) is given as a gift, the person who has given the gift will be deemed to have sold the capital property at fair market value (FMV), and will have to pay tax on any resulting capital gain. The FMV is deemed to be the "cost" to the person to whom the shares were given

callernamet wrote: ↑ THIS.

I always hate when people ask such questions here with such big, a bit complicated and financial decision.
This always should be with tax consultants/lawyers. But I guess no harm in asking.
So some tips here. https://www.taxtips.ca/personaltax/when ... axable.htm

Quentin5 wrote: ↑ Why do you want to gift it to them?
In general its the other way around, parents want to gift assets to their children to avoid probate/estate taxes.

You could instead go with a cost sharing arrangement, they pay the bills from property tax to utilities to maybe even repairs. As long as they pay only the actual costs and not any extra then there is no taxes either way.

Quentin5 wrote: ↑ Why do you want to gift it to them?
In general its the other way around, parents want to gift assets to their children to avoid probate/estate taxes.

You could instead go with a cost sharing arrangement, they pay the bills from property tax to utilities to maybe even repairs. As long as they pay only the actual costs and not any extra then there is no taxes either way.

Dynatos wrote: ↑ It would likely then be seen as a rental in the eyes of the tax man, triggering capital gains if they choose to sell in the future.

Quentin5 wrote: ↑ It would not if he makes no profit.

Dynatos wrote: ↑ And here we are again full circle to "speak with an accountant and property lawyer".