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My question is: Canadian-specific
QUESTION: My father, due to illness is looking for the best way to tranfer realestate to my sister and I. My sister and I have decided that I will keep property after dad passes and pay her out. We agree to split all costs first, taxes, legal fees, property purchase tax, etc, then I will pay her 50% of equity.
market value 600,000.00, assessed value 509,000.00, purchase price in 1991 404,000.00 plus 20,000.00 addtional costs, existing mortgage 86,000.00. This is a rental property, he does not live there.
1. Can my father put my name on title
without tax consequences
2. How much tax will eventually be due,
3. How is this calculated.
4. I need to know how much mony I will need in order to pay costs and my sister, her share.
5. Iwill problably increase the mortgage to finance the expenses payable.
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david ingram replies:
1. Your father can put your name(s) on title as a joint tenant with right of survival for estate purposes with a codicil that you and your sister do not own any equity in the property now. this would save a probate fee of about 1.4 % ($8,400 if $600,000) upon his death.
2. If he passed today and the profit was $200,000, $100,000 would be taxable as capital gains and the most tax would be about $45,000 on the capital gains portion. If he had claimed depreciation, to reduce his income taxes in the meantime, he would also pay a maximum of about 45% (depending upon the province) on any CCA (depreciation) he had claimed. I would need to see your father's past returns to figure this out.
3. as above
4. Need the old returns.
5. A sensible method of dealing with the problem.
You and your sister and father should wait until May and then sit down with someone like myself and do the calculation. Because you mention the property purchase tax, I am assuming you are in British Columbia. My charge would range from $350 to $700 to go over the 10 years of returns and give an answer.
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