Changing title of a rental house to include my wife

QUESTION:

I have a house in North Van that I have owned, in my name only, for around
24 years. Its purchase pre-dated my marriage, and it has been a rental for
most of that time. But my wife and I now intend to return and live in the
house. My understanding is that tax on any gain during the rental can be
defered until I eventually sell. However, my wife and I would like to put
the house in both our names. Would this be a deemed disposition, and would
we have to pay the tax immediately? Is there any way around this? If we set
up a post-nuptual agreement to 'share' the house, would the Canadian tax
authorities consider this also a deemed disposition, with the same result?

Since we are both US citizens, how would the IRS react to our puting the
house in two names?



david ingram replies:

If the CRA OR the IRS taxed husbands and wives when they put each other's
names on their family homes, you would know about it.

Come back to Canada and move into the house. File an election under Section
45(2) of the Canadian Income tax act and you will not have to pay the income
tax on the 24 years of profits until you actually sell the property.

Putting your wife's name on the property will NOT create a problem in either
country because you are US citizens. However, that is the clue here. If
you, a US citizen put more than $100,000 US worth of house in a non citizen
wife's name all at once, it could trigger a US gift tax.

Glad to help you with your returning tax returns in this matter.

Also, if any other readers wish to comment, I am interested in any other
opinions on this.

ingram