Putting child's name on title of parents' house - International non-resident cross border expert income tax & immigration he


My question is: Canadian-specific

QUESTION: My mother wants to put her home in joint names with me.  She lives there, and I live as a renter elsewhere.  If she sells her home or dies, does she lose the provision for principal residence for tax purposes on part of the home as it is jointly owned by me?  Can I designate her home as my principal residence as I do not own a home so that 100% is tax free as the principal residence of us both when she sells or dies?
thanks,
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david ingram replies:

This is a double answer to the same question:.


David
 
I appreciate all I learn reading your emails.
 
Mom is still thriving in her 87th year. My brother and I are executors.
 
Is there any significant advantage in us being registered on the title of her condo here in British Columbia?
 
I had forwarded the following email to my brother, but since B.C. does not have estate taxes, he is asking where the advantage might be...
 
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david ingram replies:

BC does have Probate fees though and avoiding probate fees can be worth significant dollars
The BC rates are as follows:

2  (1)  In addition to any fees payable under the Rules of Court to commence a proceeding to obtain the issue of a grant or a resealing and to any fees payable under the Rules of Court to file documents within that proceeding, a fee determined in accordance with this section must be paid to the government, before the issue of any grant or before any resealing, as the case may be, on behalf of the estate of a deceased by the personal representative of the deceased but is payable by that personal representative in his, her or its representative capacity only.

(2)  No fee is payable under this Act

(a) on a grant de bonis non, a cessate grant or a double probate, or

(b) if the value of the estate does not exceed $25 000.

(3)  If the value of the estate exceeds $25 000, whether disclosed to the court before or after the issue of the grant or before or after the resealing, as the case may be, the amount of fee payable is

(a) $6 for every $1 000 or part of $1 000 by which the value of the estate exceeds $25 000 but is not more than $50 000, plus

(b) $14 for every $1 000 or part of $1 000 by which the value of the estate exceeds $50 000.

(4)  If, after the issue of any grant or after any resealing, the personal representative learns of the existence of an asset of the deceased that was not disclosed in the Statement of Assets, Liabilities and Distribution exhibited to the affidavit leading to the grant or to the resealing, determines that the value attributed to an asset in that statement must be revised or determines that an asset was otherwise not properly disclosed, the personal representative must disclose to the court the existence and value of that asset and must pay to the government the difference between the fee paid before the issue of the grant or before the resealing and any greater fee that would have been payable under subsections (1) to (3) had the asset been disclosed or appropriately valued in the original Statement of Assets, Liabilities and Distribution.
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If her house was the only thing in the estate and worth $650,000 the probate fees in BC would be worth $8.550.  If the house was in joint tenancy with right of survivorship, there would be no probate fees and no need to go to the time and effort of probateing the will.

If the house is $1,050,000, you save $14,050.00

The big savings is in the paperwork after death.  Most of it goes away if you do not need to probate a will.

The rules are similar  for most provinces and states and there is no US Federal Estate tax now on amounts under $2,000,000 for 2007 and 2008 and $3,500,000 for 2009.  Individual states do have estate tax however but the rates change from state to state.  You can see the Ohio taxes (as an example) at http://en.wikipedia.org/wiki/Ohio_estate_tax

Because the family house falls into a taxable estate, the joint tenancy rule in Canada does not work the same in the USAwhen there is a taxable estate but can still save a lot of paperwork.

The original Q & A follows

 
My question is: Canadian-specific

QUESTION: I am an only child. My elderly parents own a home which will some
day come to me. Is there a tax advantage to having the home put in all three
of our names now and as any one of us passes on the house is already in the
survivors names. If yes what is the process to get this done.
Thanks

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david ingram replies:

If you put the home into joint tenancy with right of survivorship, the home
does not pass through probate upon any of the member's death.  With the
value of some homes today, that can be a significant saving in probate fees
in some provinces and states.

However, after the transfer form mom and dad as "joint tenants with right of
survivorship" to mom, dad and you as  "joint tenants with right of
survivorship", the property is bound to go up in value and theoretically, if
it is "yours", you would owe capital gains tax on your share when eventually
sold.

The solution is to have a side agreement which states that your name is on
title for estate and probate purposes and that you are holding what ever
share (there could be three or four kids along with mom and dad) you have in
trust for them and that you will not pledge it as security, will not list it
as an asset and will not make any effort to partition the property and have
it registered as tenants in common.

Many lawyers are not happy with this arrangement but I have seen it done
many, many times and never challenged by the CRA or IRS.  
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It is very unlikely that blind or unexpected email to me will be answered.  I receive anywhere from 100 to 700  unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients.  Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject and get answered first.  I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when i am out of town.  expert  US Canada Canadian American  Mexican Income Tax help
However, I regularly search for the words"PAYING CUSTOMER" and always answer them first if they did not get spammed out. As an example, as I write this on Sept 2, 2007 (the day before I turn 65), since June 16th (78 days), my 'spammed out' box has 24,417 unread messages, my deleted box has 8063 I have actually looked at and deleted and I answerd 576 email questions for clients and strangers.  I have also put aside 472 messages that I am maybe going to try and answer because they look interesting. -expert  US Canada Canadian American  Mexican Income Tax help
Therefore, if an email is not answered in 24 to 36 hours, it is lost in space.  You can try and resend it but if important, you will have to phone to make an appointment.  Gillian Bryan generally accepts appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321. expert  US Canada Canadian American  Mexican Income Tax help.
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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.
 
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 that.
 
Just a guideline not etched in stone. 
 
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