Buying condo for son

Dear Sir,
I read your article "Real Estate Heaven in 2007" with interest, and thought that maybe you'd be so kind as to answer this question for us. Your email address was listed, so I sure hope it's OK to contact you for this type of concern.
 
We want to get our 26 year old son into the real estate market. He makes $50,000 per annum with 0 savings.
We are thinking about buying  an investment house (affordable) further in the Valley on a 50/50 basis for him (and us). Because we are retired, we are choosing to buy a place where the price/income is reasonably close.  We would pay the downpayment of 20%, and share the mortgage 30/50, rent 50/50. It's too far away for him to live in.

Eventually, we hope he'll be able to afford something of his own closer to his work in Vancouver.
Will this affect his future 'land transfer' exemption and his ability to roll over his RRSP's as a first time home buyer if his name is on the investment property?
If the answer is "Yes", legally what would be the best way to give him the best advantage?
We are  not exactly real estate savvy; therefore we don't want to overlook something in the planning stage that will have negative repercussions later.
Thanking you in advance.
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david ingram replies:

Ozzie Jurock asked me to reply to this. And, as you realize there ae two separate items to consider in BC.  One is the Provincial First Time Buyer's exemption from paying the Property transfer tax and the secind is the ability to take the money out of his RRSP on a tax deferred basis.

I will deal with the RRSP issue first.  - He WILL be a first time home Buyer for this purpose if he does not live in the rental house. The following is a quote with example from the Government's HOME BUYERS GUIDE Pamphlet which you can read in full at:

http://www.cra-arc.gc.ca/E/pub/tg/rc4135/rc4135-e.html#guide

You have to be considered a first-time home buyer Generally, before you can withdraw funds from your RRSPs to buy or build a qualifying home, you have to meet the first-time home buyer's condition. If you are a person with a disability, or you are acquiring a home for a related person with a disability or helping such a person acquire a home, you may not have to meet this condition. Please refer to the section called "Exception to the first-time home buyer's condition".

You are not considered a first-time home buyer if, at any time during the period beginning January 1 of the fourth year before the year of the withdrawal and ending 31 days before the withdrawal, you or your spouse or common-law partner owned a home that you occupied as your principal place of residence.

If at the time of the withdrawal you have a spouse or common-law partner, it is possible that only one of you will be considered a first-time home buyer (see Example 1).

Example 1
In 2003, Paul sold the home he had occupied as his principal place of residence for five years. He then moved into a rented apartment. In 2003, he met Jane and she moved in with him. Jane had been renting her own apartment, and had never owned a home.

Jane and Paul were married in August 2006. They would like to withdraw funds from their RRSPs to participate in the HBP in September 2006. Since Paul owned and occupied his home during the period beginning January 1 of the fourth year before the year he wants to make the withdrawal, he is not considered a first-time home buyer, so he cannot participate in the HBP in 2006. Paul will be able to participate in the HBP in 2008, as he will not have owned a home that he occupied as his principal place of residence since January 1, 2004.

However, Jane is considered a first-time home buyer, since she never owned a home, and she did not live with Paul during the period in which he owned and occupied his home as his principal place of residence. She can participate in the HBP in 2006, providing all the other requirements are met.

If Jane does not participate in the HBP in either 2006 or 2007, Paul can participate in the HBP in 2008. If they want to participate together in the HBP, they both have to wait until 2008 at which time they can withdraw funds under the HBP to buy or build a qualifying home.


In this section, the word "home" has the same meaning as the term "qualifying home".

To determine if you are considered a first-time home buyer, complete the following questionnaire:

Are you considered a first-time home buyer? Question 1 - Did you, at any time during the period beginning January 1 of the fourth year before the year of the withdrawal and ending 31 days before the withdrawal, own a home that you occupied as your principal place of residence?

Yes check box You are not considered a first-time home buyer.

No check box Go to question 2.

Question 2 - Do you have a spouse or common-law partner?

Yes check box Go to question 3.

No check box You are considered a first-time home buyer.

Question 3 - Did your spouse or common-law partner have an owner-occupied home, at any time during the period beginning January 1 of the fourth year before the year of the withdrawal and ending 31 days before the withdrawal, that you occupied with that individual while you were living together as spouses or common-law partners?

Yes check box You are not considered a first-time home buyer.

No check box You are considered a first-time home buyer.

If you could not participate in the HBP in a particular year because you did not meet this condition, see the section called "If you could not participate in a particular year, can you participate in a later year?"

Exception to the first-time home buyer's condition - You do not have to meet the first-time home buyer's condition to participate in the HBP if any of the following situations applies to you:



Note
If any of the above exceptions do not apply, you have to meet the first-time home buyer's condition at the time you make a withdrawal from your RRSPs under the HBP. If this condition is not met at the time of the withdrawal, the amount will have to be included in your income.


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That deals with the RRSP, Next is the BC government's Property transfer Tax.exemption.


As described, yiur son would qualify for the first time exemption because the rental was not his principal residence.


To qualify for this, he cannot have owned a principal residence anywhere which means in any other couontry as well.


You can find all the rules at the Government site at:


http://www.sbr.gov.bc.ca/rpt/ptt/FormsandGuides/0269.pdf

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