yea it's tenancy in common. I really don't see how anyone minimized tax here. Everything ended up on me without me making a penny. Why would claiming 1% save him taxes? I don't understand.
Originally Posted by OhGreatGuru
From what is written ... the only tax savings seems to be writing off the interest. I am not clear on how he can do that if no money was changing hands for rent.
Then too, while the primary residence exemption (PRE) might be available to him to shield the capital gains - claiming all the mortgage interest as I understand it, means the entire house is a rental where depending on timing, may mean he can't claim the PRE at all.
The tax book I read when renting a room out years ago said the amount of space had to be limited as well as no capital cost allowance claimed to keep the PRE intact. A small part of the house being rented meant only that % of the mortgage, utilities etc could be written off on my tax return.
Maybe he did not claim it. The place was not rented. I just assumed that he deducts it cause it's what US home owners do and I assumed it's the same in Canada. I don't really talk to him. But my main concern is that if I am liable for capital gains tax. It's the only property the family owned and still it's the only property the family owns. It's cruel that I would have to pay such a big capital gains tax without having made a single penny.
Originally Posted by Eclectic12
Why do you think it is so cruel? It seems to me you got to live free for a long time.
The real issue is whether the time you were 99% on title without proper purchase and sale (and loan) agreements in place is really a case of this being your principal residence... and between the time you left and were taken off title, any increase in cap gains is attributable to you. What was the appraised value in 2011 when you left the country? And what was it when you were taken off title? That is the piece you "could" be vulnerable for.... but I still maintain there is something shoddy about the title change arrangement. Without knowing what the brother did, or claimed on income tax, etc. there is no way for any of us to really speculate.
There is a lesson here. Do not do business with family. It's an age old proverb and one I have stuck too 'forever'.
Thank-you for the clarification. Mortgage interest on principal residences is not tax-deductible in Canada. The trade-off is that there is no capital gains on principal residence.
Originally Posted by anon100
The 99/1% split seems to be a fiction of some kind.
If CRA asks, tell them: "I never had beneficial ownership; I never had any money invested in it; I never received a dime from the sale; therefore I have no capital gains. Talk to my brother if you have any further questions."