House in grandfather's name - is it

QUESTION: My grandfather currently owns the house that I have been living in
for 5 years. This home is not his primary residence. If we transfer the
title into my name via a gift of $1 and then I live in it for years to come,
when we do decide to sell will the property be subject to capital gains?
Would my grandfather have to pay capital gains when he transfers or gifts
the house to me?
thanks
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david ingram replies:
If the property was always meant to be yours, he may be holding it in trust.
This would be true if you have been making any property tax or mortgage
payment directly to the bank or specifically to your grandfather so that he
can pass it on to the mortgage company and the reason that it was in his
name is that you could not get a mortgage so went to grandpa..
It would also have been necessary for you to have done any repairs and
maintenance although if grandpa "kicked in" some here and there as a nice
grandpa might (mine bought me a $430 car in 1960), that would have been
okay. The legal term that you might use is that you have / had a
"constructive trust" arrangement.
On the other hand, if you have been paying rent, and grandpa has been filing
a T776 to report the rental income and claim rental expenses on his tax
return, the property was clearly his and any difference between the purchase
price and its fair market value on the day he transfers it to you for any
price, is taxable and he must report the profit on Schedule 3 and then
report 50% of that amount on line 127 of his tax return.
Once the house is in your name and/or if it was always yours, there is no
capital gains tax provided it was the only one you have.
If you are in the province of BC, and your grandfather did not treat it as a
rental house, there is no PPT on its transfer to you although you
might/likely qualify for a first time buyer's exemption.  To qualify in BC,
you must have lived in BC for the immediate year before the transfer OR have
filed BC tax returns as a resident for 2 out o f the last 6 years.
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