Principal Residence - Constructive Trust


-We purchased an acreage for my mom. in July 2000.
-We moved a house on to the property and completed it for her to live in
over the next 6 months.
-My mom moved into the house in 2001.

-We did not purchase the property as an investment, we purchased it as her
principal residence as she had lost her previous residence when a
relationship she was in turned sour.
-Mom has paid all taxes, all bills for the entire time she has been in the
house and will until she dies or decides to sell and uses the proceeds to
purchase something more suitable later in life.
-We put all 3 names on the title in recognition that mom has not been the
best with managing her finances, and relationships so it was also meant to
protect her from herself. It is also meant to streamline probate, and
estate issues when she does die.

-Last year we purchased an investment property and my mother signed for the
mortgage. In effect she gave us a loan (against her house) for the purpose
of the investment, equivalent to the bank's mortgage rate.

Tax Questions:

-What is required to sustantiate mom's claim of this being her personal
residence when it does come time to sell or she dies? Although we are
legally on title, she is definitely the beneficial owner of the property.
What if anything is required to support this.
-If this is not supportable, what would be the best way to minimize tax
exposure when we have to purchase a new home for her?
-Would a signed document indicating that mom was the majority owner of the
property be sufficient. If so is there a minimum amount that we can be
designated to own vs her (ie we each own 5%, vs 90% for her?)

-Are there special issues that arise out of mortgaging mom's place to
finance our investment property (we all signed the mortgage papers)? If so
should we have a signed agreement that documents the transaction, with mom
being the intermediary in the transaction (do I need to do this before I
file my taxes).
(I was unable to figure out how to search the archives. If you can't
address this question as part of your newsletter, I would like to be given
an estimate for what you would charge me for a paid consultation on this

david ingram replies:

I hate to say it but you should have a consultation either in person or by
conference call with mom so that everyone has their ducks in order.

If mom has made all payments on the house, it is likely hers under what is
called a constructive trust. I will let you google "Constructive Trust" for
several examples.

as for charges,

Phone consultations are $400 for 15 minutes to 50 minutes (professional
hour). Please note that GST is added if product remains in Canada or a phone
consultation is in Canada.

This is not intended to be definitive but in general I am quoting $800 to
$2,400 for a dual country tax return.

$800 would be one T4 slip one W2 slip one or two interest slips and you
lived in one country only - no self employment or rentals or capital gains -
you did not move into or out of the country in this year.

$1,000 would be the same with one rental

$1,200 would be the same with one business no rental

$1,200 would be the minimum with a move in or out of the country. These are
complicated because of the back and forth foreign tax credits. - The IRS
says a foreign tax credit takes 1 hour and 53 minutes.

$1,500 would be the minimum with a rental or two in the country you do not
live in or a rental and a business and foreign tax credits no move in or

$2,400 would be all of the above and you moved in and out of the country.

This is just a guideline for US / Canadian returns

We will still prepare Canadian only (lives in Canada, no US connection
period) with two or three slips and no capital gains, etc. for $150.00 up.

With a Rental for $350

A Business for $350 - Rental and business likely $450

And an American only (lives in the US with no Canadian income or filing
period) with about the same things in the same range with a little bit more
if there is a state return.

Moving in or out of the country or part year earnings in the US will ALWAYS
be $800 and up.

TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part
of a tax return.

8891 forms are generally $50.00 to $100.00 each.

18 RRSPs would be $900.00 - (maybe amalgamate a couple)

Capital gains *sales) are likely $50.00 for the first and $20.00 each after

Just a guideline not etched in stone.