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Taking name off joint tenancy of property title - tax implications?

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Taking name off joint tenancy of property title - tax implications?

A bit of background, my parents primary residence was transferred to me and my sister under joint tenancy. It remains as my sisters primary residence, and mine at the moment. We both do not have any other property.

I plan on moving to the US in the future and to avoid major tax complications or headaches down the road, I want to be taken off the the joint tenancy completely.

I imagine this is possible, but what I am most curious about is will it trigger any tax complications in Canada if this happens? There will not be any financial gain for me or anything in this transaction. I just want my name off the property title/deed.

Another question I had, since the names was transferred from my parents to me and my sister without any capital gain tax, if we decide to sell the house (while its still our primary residence,) would it trigger capital gain tax as we inherited the house?)

Any advice would be greatly appreciated.
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Joint tenancy with right of survivorship typically has a stronger play with regards to holding of US property by foreign persons as it pertains to US estate tax purposes. For Canadian purposes, all it does is help to mitigate/avoid probate issues. There are no tax consequences to taking your name off title.

As for selling the home, generally speaking if it is indeed your principle residence then there won't be any capital gains tax on disposition.
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So your parents are completely off the deed now? What kind of joint tenancy was enacted with your sister? No capital gains was declared at transfer, but any declarations of ownership/trust/benefit/etc. made?

I'm working through my own case, been reading these references:

http://www.advisor.ca/news/the-pitfalls ... ancy-49801
http://beaconlaw.ca/joint-tenancy-as-an ... -and-cons/
http://www.thebluntbeancounter.com/2013 ... amily.html
Intricated
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Intricated wrote: So your parents are completely off the deed now? What kind of joint tenancy was enacted with your sister? No capital gains was declared at transfer, but any declarations of ownership/trust/benefit/etc. made?

I'm working through my own case, been reading these references:

http://www.advisor.ca/news/the-pitfalls ... ancy-49801
http://beaconlaw.ca/joint-tenancy-as-an ... -and-cons/
http://www.thebluntbeancounter.com/2013 ... amily.html
They are off the house title completely and me and my sister are the joint tenants not tenants in common. There was a paper that said "trust" on it which basically says if they house is sold, the total value of the house would be split between family memebers. (I have more then 1 sister)

I am in contact with the lawyer who intiially set it up but god he's awfully slow at getting back to me and I'm not sure if he will have the tax\accounting knowledge portion.

Oh, there was no capital gain taxes paid during the initial transfer from my parents to me and my sister.
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Yeah, I would use the lawyer to get/confirm all the paperwork, and take it to an accountant to figure out the tax part.

The closest situation I've read is what Beacon Law describes for the case of a parent transferring to the property to joint tenancy between said parent and a child, while there are other children too, and handling complexities via a declaration of trust. It's unclear to me how your family (legally) can not have a capital disposition when the transfer was made from parents to jointly (and only) children, as the I don't think the parents can claim beneficial ownership.
Alternatively, the parent could require the child to sign a declaration of trust confirming that the child does not have beneficial ownership in the property, but simply holds his or her interest in trust for the parent. In addition to reducing the possibility of a dispute between the child and the other beneficiaries of the parent’s estate, the declaration provides the parent with a greater amount of control over the property, and may prevent the deemed disposition of the property for income tax purposes (because beneficial ownership of the property remains with the parent).

However, Canada Customs and Revenue Agency (“CCRA”, formerly Revenue Canada) has suggested that the existence of a declaration of trust will not, in and by itself, be conclusive evidence that beneficial ownership of the property has not changed. It would depend on all of the circumstances.

CCRA’s position is that if legal title to an asset is transferred from a parent to the parent and a child, but beneficial ownership remains with the parent (as confirmed by the declaration of trust and other circumstances), a disposition for income tax purposes has not occurred. Having said that, CCRA pointed out that in such a situation a true joint tenancy with the child would not exist and, in its opinion, the goal of reducing probate fees would not be achieved because the property would not pass to the child by right of survivorship.
Intricated
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Intricated wrote: Yeah, I would use the lawyer to get/confirm all the paperwork, and take it to an accountant to figure out the tax part.

The closest situation I've read is what Beacon Law describes for the case of a parent transferring to the property to joint tenancy between said parent and a child, while there are other children too, and handling complexities via a declaration of trust. It's unclear to me how your family (legally) can not have a capital disposition when the transfer was made from parents to jointly (and only) children, as the I don't think the parents can claim beneficial ownership.
Most of the research I found online seems to apply when the house is inherited when the parents either pass away or one of the joint tenants pass away. The trust though is between the siblings in the family, it has nothing to do with the parents.

I think there the taxes weren't triggered because the house was mine and my sisters primary residence. I don't think tax will be triggered again because my sister will be the primary residence once taken off and when she goes to sell the house, it will again won't be triggered because it's her primary residence as there is no capital gain tax for primary residence.

Most the examples I found online, is they inherit the property later on in life when they already have a different primary house and that of course triggers a capital gain tax if they decide to keep it for maybe 5 years then sell.

Who knows though, I'm suppose to call my lawyer back tomorrow and hopefully it all gets sorted without crazy taxes.
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qsub wrote: I think there the taxes weren't triggered because the house was mine and my sisters primary residence. I don't think tax will be triggered again because my sister will be the primary residence once taken off and when she goes to sell the house, it will again won't be triggered because it's her primary residence as there is no capital gain tax for primary residence.
So is this what happened and is planning to happen?

Before: Parents jointly held deed (and home was designated as their primary residence).
After: Transfer of deed to be joint tenancy between you and sister, designated primary residence on your sister's "half". Parents get tax-free capital gains from the sale of the primary residence, and ACB is set at FMV for you and sister.
Later: You want to effectively make your sister the only title holder. I think this is done via transferring your "half" of the joint tenancy to her via mutual agreement. In by itself, I believe this counts as a capital disposition for you, so it's taxable. Your sister has her ACB updated to include the new half, but it's a moot point should she dispose it while it's still her primary residence.

The Later step may be complicated by the trust document. The exact wording and interpretation of what constitutes a "sale" of the "house" may be critical to what legal rights all parties of the trust may have when the After step is taken: after all, in a sense, you are planning to "sell" a part of the house.
Intricated
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I don't think it triggers a tax because I did not own any other house. Neither did my sister. It was both our primary residence. If I owned another property that was my primary residence, then yes it should trigger a capital gain tax.

"Every Canadian is entitled to have one principal residence that grows in value tax-free."

http://www.moneysense.ca/property/joint ... bate-fees/
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Oh sorry, I missed that part of your post. The trust part I'd be double sure about with your lawyer (and a tax accountant).
Intricated
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qsub wrote: I plan on moving to the US in the future and to avoid major tax complications or headaches down the road, I want to be taken off the the joint tenancy completely.
What is your plan after you move to US from Canadian tax perspective? Do you intend to keep your Canadian tax residency status or not?

If you remain Canadian tax resident, you will have to file Canadian tax return and declare your foreign income. And pay Canadian taxes on foreign income.

If you become a non-resident you cannot claim the property as primary residence anymore. It becomes investment property and the disposition rules are very different. Although there will be no Provincial Tax on capital gain, there is a Federal Surtax you will have to pay.

Not simple at all.
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andrew4321 wrote: What is your plan after you move to US from Canadian tax perspective? Do you intend to keep your Canadian tax residency status or not?

If you remain Canadian tax resident, you will have to file Canadian tax return and declare your foreign income. And pay Canadian taxes on foreign income.

If you become a non-resident you cannot claim the property as primary residence anymore. It becomes investment property and the disposition rules are very different. Although there will be no Provincial Tax on capital gain, there is a Federal Surtax you will have to pay.

Not simple at all.
I am severing the ownership/joint tenancy so the house will no longer be in my name. It is my primary household at the moment so I assume there should be no capital gain tax. I am then moving to the US to be a a permanent resident and filing taxes there. Canada will not be my resident.
Yo, if the rap game is whack, everybody's blamin you
You from brooklyn? Then biggie must be ashamed of you

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