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I am a Canadian living in Ontario. We have rental property…

I am a Canad***** *****ving...
I am a Canad***** *****ving in Ontario.
We have rental property that we want to place our son on the property as joint tenant.
My lawyer says that we can do that but when the property is sold our son will pay capital gains tax ( this is ok)
Question is this correct?
Is their any possibility of him paying capital gains tax when he is placed on the property as joint tenant
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Answered in 2 hours by:
10/13/2017
Debra
Debra, Lawyer
Category: Canada Law
Satisfied Customers: 105,495
Experience: Lawyer
Verified

Hello! My name is Debra (formerly known as Legal Ease). Thank you for your question. I'm reviewing it now, and will post back again shortly.

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Just to clarify this is not your principal residence, correct?

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Customer reply replied 9 months ago
this is a rental unit and we have never lived there

Then the answer it not completely correct unfortunately.

When you add your son's name to the title there is a deemed disposition of 1/2 of the property at fair market value and so you will pay capital gains tax on the gain if any. So you would have to pay capital gains tax the same year you add his name to the title.

Then if the property is sold later on you both would pay capital gains tax. The amounts would be different as your son would pay less as he is deemed to have acquired the property at fair market value as of the date his name went on title.

Does that help clarify the law.

Please feel free to post back with any follow-up questions you may have. If you don't have any then I hope I have earned a 5 star rating but if you don't feel that I have please don't hesitate to reply back and let me know what more I can do to assist you. Finally, please know that even after you rate me I will be here for you and you can ask follow-up questions if you think of them later on at no further charge of course.

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Customer reply replied 9 months ago
it does and thank you

You are very welcome.

If we are done please be sure to rate me before you leave the site so that I can receive credit for my work.

Thanks and enjoy your weekend.

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Customer reply replied 9 months ago
Hi Debra
Just one more question.
We also have a commercial property in which we live on the top floor and rent the main floor. Would what you just answered would apply for this property also
Thanks
Robert

Yes but the capital gains would be reduced by 1/2 if 1/2 of the property is your principle residence.

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Customer reply replied 9 months ago
That is what I thought
Thanks
Robert

You are very welcome.

Please rate me now so that I can receive credit for my work.

Thanks and take good care.

Debra
Debra, Lawyer
Category: Canada Law
Satisfied Customers: 105,495
Experience: Lawyer
Verified
Debra and 87 other Canada Law Specialists are ready to help you
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Customer reply replied 9 months ago
Debra,
How much of an expert to you have in real estate law. I have a situation that needs to be looked at.
Thanks
Robert

I am not an expert in real estate. But post your new question on a new post and if I know the answer I will answer. If not another expert might.

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Customer reply replied 9 months ago
Great I will do that next week as I need to get the document in question
Robert

OK!

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