My question is what legal or taxation problems would my parents have in
transferring the home that they own or to my sister.
My sister has lived in the home for the past 8 years and just last June
2003, my parents did purchase this property from the couple that rented to
my sister.
My parents would like to transfer the property over to my sister without
being stung for big taxes.
We are aware that no PST has to be paid (Special Tax return FIN 579) but
what else can she expect if she does give this gift to her.
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david ingram replies:
If the property was purchased in June 2003 and was to be given to your
sister but not put in her name right away because of a claim by her
ex-husband or something similar, there will not be any difference in equity
to create a tax problem to your parents.
The date of the actual transfer in land titles is not necessarily the date
that the property became hers by gift.
As an example, your mother might give you her car with six months of
insurance on it and you leave it in her name until the insurance runs out.
I am driving a car right now with the transfer papers signed and we are
leaving the insurance on until it runs out in June. If that seems strange,
it might help to know that I gave the car to the present registered owner in
the first place under the same deal. He has now given it back to me because
it burns too much gas.
The question here would be, "why, if it was a gift, was it put in your
parent's name in the first place?"
If the property was purchased in June 2003 and the decision was made to give
it to your sister after it had gone up $20,000, then the gift would atract
capital gains tax of about $3,000 to $4,000. (as an example).
There are no gift taxes in Canada or BC.
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