Real Estate

Title Transfer + Principle Residence Exemption?

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  • May 17th, 2021 7:16 pm
[OP]
Member
Jul 28, 2012
203 posts
42 upvotes

Title Transfer + Principle Residence Exemption?

Hi all,

I'm kind of lost on this, just wondering how to report this for tax purposes.

Both my sister and I were on title and live in our current house. She's moving out and buying a property of her own so we refinanced, I paid her her portion of the equity and had her removed off title.

Would this mean she'd have to report that she sold her principle residence? If so, she'd put 50% of the cost of what we purchased for and the proceeds would be the refinanced amount that I paid her?

This is going to look funny because it will look like there was a loss on the sale of the property on her end which isn't true and might raise red flags I'm assuming??

Also, anything else I should be doing on my end from a tax perspective? The whole transaction has already been done. Just figuring out the tax filing aspect.
7 replies
Deal Addict
Mar 3, 2018
3051 posts
3430 upvotes
GTA
When filing her tax return your sister needs to report the sale by ticking the box on the bottom of Schedule 3 (principal residences), and completing page one only of the T2091 form. She only needs to report the proceeds of the sale for her share not the original cost. This effectively claims the exemption.

There are no tax consequences to you at this time. When you eventually sell complete like above as long as it was always your principal residence.
[OP]
Member
Jul 28, 2012
203 posts
42 upvotes
Thanks!! Does the Adjusted Cost Base asked in the form not reflect the original cost that needs to be mentioned?
Deal Addict
Mar 3, 2018
3051 posts
3430 upvotes
GTA
aspen300 wrote: Thanks!! Does the Adjusted Cost Base asked in the form not reflect the original cost that needs to be mentioned?
No need to report the adjusted cost base (ACB).
As explained in the preamble on top of the T2091 complete page one only if you tick box one of line 17900 on schedule 3. Stating basically it was always your principal residence. The ACB on page 2 of the T2091 only applies if there were years it was not your principal residence.
[OP]
Member
Jul 28, 2012
203 posts
42 upvotes
Wonderful!! Thanks so much Dave!! Really appreciate your help = )
[OP]
Member
Jul 28, 2012
203 posts
42 upvotes
Sorry, one last question if you don't mind. Should my sister report the Proceeds from Disposition as what she received in cash + what was paid down for her portion of the mortgage or her portion of the FMV?

Her portion of the FMV would have been more hence why I ask.
Deal Addict
Mar 3, 2018
3051 posts
3430 upvotes
GTA
aspen300 wrote: Sorry, one last question if you don't mind. Should my sister report the Proceeds from Disposition as what she received in cash + what was paid down for her portion of the mortgage or her portion of the FMV?

Her portion of the FMV would have been more hence why I ask.
For tax purposes because it is your sister you are dealing at non arm's length (related by blood). As such her portion of the FMV would be deemed her proceeds of disposition.

As this is an tax exempt transaction the accuracy of the value is not critical. If CRA changes the value there would still be no tax consequences.
[OP]
Member
Jul 28, 2012
203 posts
42 upvotes
Thanks so much!! You've been a life saver Dave!!

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