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Legal Ease
Legal Ease, Lawyer
Category: Canada Tax
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Experience:  Lawyer
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My son wants to by a condo but cant qualify for the mortgage

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My son wants to by a condo but cant qualify for the mortgage without us co-signing. Somewhere I had been told that if he sells and pays us back we will be charged capital gains on that money. If we were only paid back the principal, would this be true?? We want to help him out but dont want to get ourselves in hot water. Are there any other tax implications to doing this? I live in Canada.
Submitted: 1 year ago.
Category: Canada Tax
Expert:  Legal Ease replied 1 year ago.
Thank you for your question.

If your name is XXXXX XXXXX solely so that your son can get financing it is possible that you can prove to the CRA that you are only holding the property in trust for your son and for this reason you would not need to pay capital gains taxes.

It would be best for you to consult with a chartered accountant before going ahead so that the accountant can review your particular fact situation to be sure that you will not have difficulty proving this to the CRA when the time comes.

Let me know if you need any further clarification.
Customer: replied 1 year ago.

If we were to co-sign only and not contribute any money of any sort, my understanding is that as long as we make it clear that this residence is for the sole use of our son and we have no financial interest in the property other than having our names on title only to secure financing for him, that if he sells, any profit from the sale would be exempt from being taxed because it is his primary residence and we could be removed from title the next time his mortgage is refinanced. Is this true?

Expert:  Legal Ease replied 1 year ago.
That is true.

That is what I was referring to.

But it can also be true if you do lend him some money or give him some.

So long as it's clear when he sells it that only he is making any profit you will be OK.
Legal Ease, Lawyer
Category: Canada Tax
Satisfied Customers: 85413
Experience: Lawyer
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