Canadian Family buying a subdividable rental house

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QUESTION:
My husband and I are purchasing an investment property.  There is a house on it currently which we will be renting out until we decide to develop the property into lots (probably not for another 5+ years) or sell the property altogether.  Currently, I am a stay-at-home mom and my husband is the income earner.  
This will probably be the case for another 3-4 years.
My question is, do we register the name of the property in both our names or just my husbands for tax implications?  We will be showing a loss in the first few years of ownership which I know my husband will right off.  But, will there be any harm in registering the property as dual ownership?
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david ingram replies:
It does not matter whose name the property is registered in.
Section 74 of the Canadian Income tax act contains law that states that it does not matter whose name a property is registerd in, the tax deduction or the taxable income is to be recorded ont he tax return of the person who put the money into the property or any substitution thereof.  Therefore, if your husband gave you $100,000 and you used it to buy this property and put it your name exclusively, the profit or loss (as the case might be) is "his" not yors.
Section 75 has the same regulation for capital gains between a husband and wife (including common law).
Therefore, for income splitting reasons, it is important to structure the deal for the best future.
For instance, if you both have money in the family home and your husband has the money for the down payment, you wopuld be better off having him pay down your non-deductible mortge with the down payment money and then borrowing money on the family house and using your "joint" monies to by the new property so that when the profits do come, you get to split them.  
The split does not have to be 50/50.  As you can see, if it turns out that he has put in 63% and you only have 37%, the split would be just that way.  You need to sit down with someone who clearly understands the implications of Sections 764 and 75.  If the person you pick does not automatically know what they are, leave until you find someone who does.
It will NOT be the realtor.  Even though I have a real estate licence, it is NOT part of realtor training and I do not think I hafve ever met another realtor with that knowledge.  Most accountants will not be skilled with it either.
If you do want help, either George Hatton, CA or myself in our office would be glad to assist. Realize that you will need some sort of spread sheet showing "who made what", where it went and how it is being used.
These also get complicated in cases where you might have just inherited $50,000 to use as the down payment buy have no cash flow to handle the losses.  As you can see, the ownership for "tax" purposes can change as your husband puts more money in each year to fund the operating costs.
Hope this helps.
You can reach George Hatton or myself at the address below
David Ingram of the CEN-TA REALTY  Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
 
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