Real Estate

I receive help from my mother to buy a house, how should the money proceed?

  • Last Updated:
  • Apr 2nd, 2020 10:40 am
[OP]
Member
Sep 3, 2006
269 posts
92 upvotes
Montreal

I receive help from my mother to buy a house, how should the money proceed?

Hello everyone,

I'm one of the few lucky (and spoiled) that get some help from a loved famly member to buy a house. (short context : recently divorced, to keep the house, I needed to buy my ex's share of the house. Otherwise we would have to sell it and we don't want that, I'm in good terms with my ex).

Ok back to the question. My mother will give me 38k. On the day we do the transfer with the notary, I will give the money to my ex. How should this money transfer technically to protect the interests of all 3 parties in this story? The question relates to taxes that I would like to avoid if it is possible and legal of course.

1) Should my mother give me the money (family link), then I give it to my ex
2) Should my mother give the monney to my ex directly with a mention that it is to purchase her share of the house
3) another option?

The question might be super stupid, I'm not a tax specialist. I would love to hear from other RFDers. I can't be the first to have a similar story. :)

I asked my notary, she said she can't answer to my question...
6 replies
Deal Fanatic
Nov 22, 2015
5769 posts
5267 upvotes
Voltz23 wrote: Hello everyone,

I'm one of the few lucky (and spoiled) that get some help from a loved famly member to buy a house. (short context : recently divorced, to keep the house, I needed to buy my ex's share of the house. Otherwise we would have to sell it and we don't want that, I'm in good terms with my ex).

Ok back to the question. My mother will give me 38k. On the day we do the transfer with the notary, I will give the money to my ex. How should this money transfer technically to protect the interests of all 3 parties in this story? The question relates to taxes that I would like to avoid if it is possible and legal of course.

1) Should my mother give me the money (family link), then I give it to my ex
2) Should my mother give the monney to my ex directly with a mention that it is to purchase her share of the house
3) another option?

The question might be super stupid, I'm not a tax specialist. I would love to hear from other RFDers. I can't be the first to have a similar story. :)

I asked my notary, she said she can't answer to my question...
There is no gift tax in Canada. Doesn't matter who the money is coming from or going to (unless it's from an employer to an employee)

Also... you don't just give the money to your ex... your lawyer is handling the transaction - it will be included in the disbursements.
Deal Guru
Feb 22, 2011
10209 posts
12681 upvotes
Toronto
Your mom can pay your lawyer who will pay your ex once everything is finalized, the lawyer will give directions how to pay but likely a certified cheque. Assuming this is a primary residence there are no tax implications.
Member
User avatar
Jan 7, 2019
320 posts
306 upvotes
This would be considered a gift of funds. Write up a document saying this is the case so you have a record of it. Have your mother transfer the funds from her account to you by way of CHQ or Bank draft (Just for clarity purposes) and then you can transfer it to the lawyer who would then transfer it to your ex.

Clear step by step along with documentation will avoid any future problems such as your ex pretending she never got the money.
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Deal Fanatic
Nov 22, 2015
5769 posts
5267 upvotes
BrokeMillennial wrote: This would be considered a gift of funds. Write up a document saying this is the case so you have a record of it. Have your mother transfer the funds from her account to you by way of CHQ or Bank draft (Just for clarity purposes) and then you can transfer it to the lawyer who would then transfer it to your ex.

Clear step by step along with documentation will avoid any future problems such as your ex pretending she never got the money.
That's unnecessary. As long as the funds are going through a lawyer, there's nothing to worry about.

An unofficial scrap of paper is not going to mean anything in court.
[OP]
Member
Sep 3, 2006
269 posts
92 upvotes
Montreal
Thank you to everyone for your quick replies. I will ask my mother to do a certified cheque and I will bring it to my notary.

This is weird.. I'll pick up the cheque but I won't able to visit her.. This world is weird :(
Deal Fanatic
Nov 22, 2015
5769 posts
5267 upvotes
Voltz23 wrote: Thank you to everyone for your quick replies. I will ask my mother to do a certified cheque and I will bring it to my notary.

This is weird.. I'll pick up the cheque but I won't able to visit her.. This world is weird :(
If you have a way to transfer it to you electronically, you could just do 1 certified cheque for the whole amount including legal fees, etc.

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