Principal residence exemption and minor child
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Thread: Principal residence exemption and minor child

  1. #1
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    Principal residence exemption and minor child

    I moved out of my lifetime principal residence 10 years ago. At that time, my adult child (over 18 yrs of age) moved in to the house.

    I will sell the house this year. The market value of the house 10 years ago was $500,000. Today it is $600,000.

    Because my child is living in the house , the additional $100,000 gain is eligible for the principal residence exemption....or does the child have to be under 18?



    I purchased the house 20 years ago for $350,000. Certainly, the $150,000 accrued gain when I moved out is exempt. Do I get an extra kick by virtue of my adult child moving in and in a sen

    sense preserving the exemption.

    I believe it has to be a minor child to keep the 'Family Unit' in tact.....so no exemption for the last 10 years. Do you agree?

    thanks in advance
    Bill


  2. #2
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    Where have you been living for the past 10 years? You can only have one principal residence at a time.

    I think the under-18 rule was dropped in 2000, but I stand to be corrected. The current T4037 just refers to "any of your children" without reference to age.
    Last edited by OhGreatGuru; 2017-05-10 at 09:00 PM.

  3. #3
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    Thanks!

    I moved into a care home....so renting.

    This CRA tax folio says the family unit must be spouse or minor child....but lots of people are saying oh just have your child move in which could be "adult" child....causes confusion!!

    Designation of a property as a principal residence

    2.13 For a property to be a taxpayer’s principal residence for a particular year, he or she must designate it as such for the year and no other property may have been so designated by the taxpayer for the year. Furthermore, no other property may have been designated as the principal residence of any member of the taxpayer’s family unit for the year. For purposes of the latter rule, which applies if the taxpayer is designating a property as his or her principal residence for 1982 or a subsequent year, the taxpayer’s family unit for the year includes, in addition to the taxpayer, the following persons (if any):

    the taxpayer’s spouse or common-law partner throughout the year, unless the spouse or common-law partner was throughout the year living apart from, and was separated under a judicial separation or written separation agreement from, the taxpayer;
    the taxpayer’s children, except those who were married, in a common-law partnership or 18 years of age or older during the year; and
    where the taxpayer was not married, in a common-law partnership or 18 years of age or older during the year:
    the taxpayer’s mother and father; and
    the taxpayer’s brothers and sisters who were not married, in a common-law partnership or 18 years of age or older during the year.

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  5. #4
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    T4037

    I think I see where I'm getting confused......... have read T4037 carefully again.

    Can be PR if child (any age) lives in the house at sometime in the year....thats all I need to know.

    Thanks guru.

    Bill

  6. #5
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    There is an ambiguity her.
    The ordinarily inhabited rule

    2.10 Another requirement is that the housing unit must be ordinarily inhabited in the year by the taxpayer or by his or her spouse or common-law partner, former spouse or common-law partner, or child.


    (Note - no age limit stated)

    2.13 is not dealing with who ordinarily inhabits, in order to qualify for declaring it the taxpayer's residence. It is an article dealing with the issue that no other property may have been designated as a principal residence by any member of the "Family Unit", and then lists who are considered members of the family unit for said provision. Children over 18 are no longer considered part of the "Family Unit", and if they have a separate principal residence it does not diminish your eligibility to claim the house as a principal residence.

    Does that make sense now? I think it is 2.10 that is applicable in your case, and that seems consistent with the wording of T4037.

    But I am not a tax lawyer.

  7. #6
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    tax lawyer = $500/hour

    I thought I was settled on this, but read a comment on an article (etc) that said adult child must be 'dependent'.....hmmm.

    Note from the authorr: Section 54 of the Act has an explanatory note which states that “Child” can include both an adult and a minor child. The note then refers the reader to the extended definition of “child in section 252(1) which states a child includes a person for whom the taxpayer is the legal parent and a person who is wholly dependent on the taxpayer and was immediately before the person attained the age of 19 had the legal custody and control of the individual.

    So, it would appear that an adult can be a “child” so long as they continue to be dependent on the taxpayer.

  8. #7
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    Extended meaning of child
    252 (1) In this Act, words referring to a child of a taxpayer include

    (a) a person of whom the taxpayer is the legal parent;

    (b) a person who is wholly dependent on the taxpayer for support and of whom the taxpayer has, or immediately before the person attained the age of 19 years had, in law or in fact, the custody and control;

    (c) a child of the taxpayer’s spouse or common-law partner; and

    (d) [Repealed, 2005, c. 33, s. 12]

    (e) a spouse or common-law partner of a child of the taxpayer.

  9. #8
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    Quote Originally Posted by billdraper View Post
    Extended meaning of child
    252 (1) In this Act, words referring to a child of a taxpayer include

    (a) a person of whom the taxpayer is the legal parent;

    (b) a person who is wholly dependent on the taxpayer for support and of whom the taxpayer has, or immediately before the person attained the age of 19 years had, in law or in fact, the custody and control;

    (c) a child of the taxpayer’s spouse or common-law partner; and

    (d) [Repealed, 2005, c. 33, s. 12]

    (e) a spouse or common-law partner of a child of the taxpayer.
    I gather your child did not pay you rent while living in your house ( nor did anyone else) and that you did not own any other property during this this time? Did you stay overnight with your child in the house while visiting?

  10. #9
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    Good thought. Live in the house anytime, even just over night....that could work.

    However, I did charge below market rent + I owned a condo for 5 years before moving to the care home. I didn't put these facts in my original post, to keep things simple.

    What I am leaning towards is splitting the number of years designates...5 years to the condo, the rest to the family home.

    My child is not a "dependent" however.

    What...try it on anyway and see if I get reassessed? Like 3 years down the road just before its statute barred, tact on interest and penalties...yikes!!

    Last edited by billdraper; 2017-05-15 at 05:47 PM. Reason: added comment

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