Canada Mother lives in house owned by daughter
My question is: Canadian-specific
QUESTION: i have two properties in my name. the townhouse my husband and i live in and the house my mom lives in. they are in my name, because at the times they needed to be bought my husband and my mom had no credit and weren't able to get a mortgage.
my mom's house is in my name, because my grandma went into a lodge and wanted to be bought out. my mom has lived there 15 years and if possible we wanted her to be able to stay there. she is on disability and only pays $350 per month toward the mortgage which is $700 per month. if we had been renting it out, it would rent for $900 to $1000 per month.
also my grandma sold it to me for almost half of what it's worth because she shared it with my mom and my mom still lives there.
now, we want to sell both and get a bigger house so my mom can move in with us, as it is getting more difficult for her to take care of the property and get up and down the stairs.
is there any way i can lessen the capital gains in this situation?
could i be seen as my mom's trustee? can having a house and contributing heavily to its payments for a disabled relative lessen the capital gains owed?
are there other ideas in this regard?
If you have been reporting the house as a rental and ever claimed a rental loss, you owe tax on the sale of the second house.
If you only put it in your name because your mother would not qualify and you have never claimed it as a rental and always considered it mom's house, then it is likely or possible that you were holding it in trust for your mother, it is her house and there is NO capital gains tax.
If your grandmother gave you half for your mother and sold you half, It might be that you were only holding half for your mother and half was an investment.
Just remember, you can call a toad a frog all day long. It is still a toad. - nothing wrong with that, I like toads.
What do any brothers and sisters think? Do they think of it as mom's house and you were just doing her a favour to finance it and make the extra payments or do they (and you) consider it 'YOUR' house. Did they contribute anything to the upkeep, mortgage payment, property taxes, etc. If it is 'YOUR' house, you owe capital gains tax.
If any brothers and sisters think that they should get a piece of the value of that house if she died tomorrow, it is likely mom's house.
The following older answer might help as well.
david ingram replies;
This is the kind of income tax help I like giving because it deals with family matters and expert family matter income tax help is really hard to find.
If the house was yours, bought and paid for by you and mother did not pay anything towards its upkeep or its purchase, then, any profit on this second residence is taxable to you.
On the other hand if mom sold another property and put her money into this second residence which was registered in your name for estate purposes and mom paid the mortgage, hydro, gas and repairs, etc., then it is your mother's house and you only held it in trust for her. She had a constructive trust as the owner of the property and it would be tax free.
Your situation may be somewhere in between. The problem is that for some reason or other few lawyers and tax people understand what a constructive trust is. Your mom, for instance, may not have had enough to buy the place you wanted so you and your husband ponied up more and rather than loan her the money, put it in your name to protect your interest from others.
In general, a constructive house is formed when a person who does not own a property (car, boat, mobile home, house, condo) treats it as their own by paying all the bills and doing all the maintenance, etc, as if it was their own.
If you put up a lot of money and mom put up half and you put it in your name to protect your money from the possibility that mom might die and you were trying to keep 'your' money from your siblings, it was likely your mother's and tax free.
If on the other hand, you and your husband are clearly getting all the money when the house is sold, you and your husband will owe capital gains tax on the sale.
hope this helps.
And of course, when it comes time to do the return for the sale, you know where we are.
QUESTION: i have two properties in my name. the townhouse my husband and i live in and the house my mom lives in. they are in my name, because at the times they needed to be bought my husband and my mom had no credit and weren't able to get a mortgage.
my mom's house is in my name, because my grandma went into a lodge and wanted to be bought out. my mom has lived there 15 years and if possible we wanted her to be able to stay there. she is on disability and only pays $350 per month toward the mortgage which is $700 per month. if we had been renting it out, it would rent for $900 to $1000 per month.
also my grandma sold it to me for almost half of what it's worth because she shared it with my mom and my mom still lives there.
now, we want to sell both and get a bigger house so my mom can move in with us, as it is getting more difficult for her to take care of the property and get up and down the stairs.
is there any way i can lessen the capital gains in this situation?
could i be seen as my mom's trustee? can having a house and contributing heavily to its payments for a disabled relative lessen the capital gains owed?
are there other ideas in this regard?
---------------------------------------------------------------------------david ingram replies:
If you have been reporting the house as a rental and ever claimed a rental loss, you owe tax on the sale of the second house.
If you only put it in your name because your mother would not qualify and you have never claimed it as a rental and always considered it mom's house, then it is likely or possible that you were holding it in trust for your mother, it is her house and there is NO capital gains tax.
If your grandmother gave you half for your mother and sold you half, It might be that you were only holding half for your mother and half was an investment.
Just remember, you can call a toad a frog all day long. It is still a toad. - nothing wrong with that, I like toads.
What do any brothers and sisters think? Do they think of it as mom's house and you were just doing her a favour to finance it and make the extra payments or do they (and you) consider it 'YOUR' house. Did they contribute anything to the upkeep, mortgage payment, property taxes, etc. If it is 'YOUR' house, you owe capital gains tax.
If any brothers and sisters think that they should get a piece of the value of that house if she died tomorrow, it is likely mom's house.
The following older answer might help as well.
------------------------------------------
QUESTION: Me and my husband own a second house, title and mortgage is in our names.---------------------------------------------------------------------
My mother lives there for free, thus we do not declare any rental income.
We want to sell the house. What's the best way to pay less tax or avoid it?
Do I have to pay tax even if it's my mom's primary residence?
Can I transfer a title in her name, she sells it as her primary residence and pays no tax?
david ingram replies;
This is the kind of income tax help I like giving because it deals with family matters and expert family matter income tax help is really hard to find.
If the house was yours, bought and paid for by you and mother did not pay anything towards its upkeep or its purchase, then, any profit on this second residence is taxable to you.
On the other hand if mom sold another property and put her money into this second residence which was registered in your name for estate purposes and mom paid the mortgage, hydro, gas and repairs, etc., then it is your mother's house and you only held it in trust for her. She had a constructive trust as the owner of the property and it would be tax free.
Your situation may be somewhere in between. The problem is that for some reason or other few lawyers and tax people understand what a constructive trust is. Your mom, for instance, may not have had enough to buy the place you wanted so you and your husband ponied up more and rather than loan her the money, put it in your name to protect your interest from others.
In general, a constructive house is formed when a person who does not own a property (car, boat, mobile home, house, condo) treats it as their own by paying all the bills and doing all the maintenance, etc, as if it was their own.
If you put up a lot of money and mom put up half and you put it in your name to protect your money from the possibility that mom might die and you were trying to keep 'your' money from your siblings, it was likely your mother's and tax free.
If on the other hand, you and your husband are clearly getting all the money when the house is sold, you and your husband will owe capital gains tax on the sale.
hope this helps.
And of course, when it comes time to do the return for the sale, you know where we are.
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