Exception for property transfer tax -


QUESTION:

Hi,
I purchased a condo in BC, Canada, last April and after 8 month transfered the property to my parents as I was told by my lowyer that if the transfer is done after more than six month I will be excepts for property transfer tax.

Now I am billed by Ministry of small buisness with the full tax amount and to be approved for an excemption, they are asking for a proof that my parenst actually resided in this property at least six month before the transfer.

Unfortunatly although my parents reside ther, but all the bills are under my name as I am the one managing them.


Just to note that I do own my own property. And my parents are first time home buyers.

My question is that what is the exact act for the tax excepmtion transfer that can apply to us here? Does it required the property to be occupied by the transferee 6 moth prior to the transfer?

If so, do you have any solution that can help me here.

Thanks for your help in advance,

------------------------------------------
david ingram replies:

I am not a BC property transfer tax specialist although I have been involved in enough.

I have no idea what the six month rule your lawyer is describing is about. 

As described in your question, you owe the PPT because you did not reside in the property for 12 months after purchase.

At any time, you should have been able to give it to your parents without their paying the PTT if you did not rent it out to others after purchase. This would apply whether they were first time purchasers or not.

If you rented it ou, they would have to be first time purchasers and the property had to be under about $350,000 - the rate changed to $375,000 in Feb 2007.

To be First time Purchasers:

* they can NOT have ever owned another property anywhere in the world.
* They must be Permanent Residents of Canada
* there must be a mortgage on he property for at least 70% of the value and it cannot be back to you for instance.
* they must fill in form   FIN269   at http://www.rev.gov.bc.ca/rpt/ptt/FormsandGuides/0269Sample.pdf

Nothing in your question indicates to me that 'you' would be exempt from PTT If you just bought the unit as a gift for your parents ..

Perhaps, what is being thought of is that when it was bought in your name, it was always your parents and that you were just a trustee.  In that case, you would be filling in the FIN269 as their trustee and getting affidavits or something showing that they were the residents. Surely, neighbours or someone can testify that they lived there.  They would have their BC medical, driver's licences, library cards to show as evidence as well.

The tax people are very specific about paperwork as well.  In my own case 5 years ago, I was in the middle of a $5,000,000 bankruptcy and a divorce at the same time.  Even though we KNEW who was to get the house, the trustee seized teh house from me (absolutley no reason to at the time) and then my now ex wife Jose Rodgers had to pay PPT on the house to get it back from the trustee.  Totally unfair, unreasonable and silly but if it is done in the wrong order, you are toast.

And to be fair, when I got the house back from my ex wife in the divorce, there was no PPT.

Two other thoughts.  If you bought this house for parents who =were not Permanent residents of Canada and they became permanent residents with 12 months, they (or anyone else) has 18 months from the time the property was originally transferred to apply for the Firt Time exemption.

---------------------------
David Ingram 
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This is not intended to be definitive but in general I am quoting $800 to $2,800 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 out

$1,600 would be for two people with income from two countries

$2,800 would be all of the above and you moved in and out of the country.
 
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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 that.
 
Just a guideline not etched in stone. 
 
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