Do I owe capital gains tax? - Page 2
Page 2 of 2 FirstFirst 12
Results 11 to 15 of 15

Thread: Do I owe capital gains tax?

  1. #11
    Junior Member
    Join Date
    Dec 2016
    Posts
    6
    Quote Originally Posted by OhGreatGuru View Post
    I agree with Altared. The whole setup sounds screwy. The only way they could make a 99/1 split would be with a tenancy in common, with some written agreement as to the division of ownership.

    I hate to sound suspicious, but this sounds like a scheme by your brother to minimize his taxes by claiming only 1% ownership, while leaving CRA to figure out where the 99% owner had gotten to.

    Either that, or it was an intentional advance on your inheritance by your parents, out of which you have now received nothing. In which case someone needs to examine brother's books.
    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.


  2. #12
    Senior Member
    Join Date
    Oct 2010
    Posts
    7,364
    ^^^^

    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.


    Cheers

  3. #13
    Junior Member
    Join Date
    Dec 2016
    Posts
    6
    Quote Originally Posted by Eclectic12 View Post
    ^^^^

    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.


    Cheers
    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.

  4. Remove Advertisements
    CanadianMoneyForum.com
    Advertisements
     

  5. #14
    Senior Member
    Join Date
    Jun 2009
    Location
    Okanagan Valley
    Posts
    3,308
    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'.

  6. #15
    Senior Member
    Join Date
    May 2009
    Location
    Ottawa
    Posts
    2,548
    Quote Originally Posted by anon100 View Post
    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.
    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.

    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."


Page 2 of 2 FirstFirst 12

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •