# Out of country condo owner



## Lights (Mar 3, 2014)

I have a question for you… I’m in a bind with time. I have listed my condo in the lower mainland, in Vancouver, but haven’t received an offer worth taking. It’s a great building and depending if I rent it out furnished or unfurnished, I can make a positive cash flow of $300-$500/month. 

I am moving to the US as my husband is a US citizen and was offer a career advancement we couldn’t refuse. He has since moved to settle in for us and I am under-going the immigration process. Our lawyers anticipate the immigration process to be done within the next 3 or so months and I’m trying to sort out my life. 

I solely own my condo and I am hoping to gift it to my younger sibling. He is currently in his masters program and won’t be able to live in the condo for another year or 2, until his program and placement is completed. I’d like to rent it out in the meantime and am not sure what my tax implications will be if I am an out of country owner. 

I have a realtor in my family who has offered to be my property manager and point of contact with our tenants. 

My mortgage term is up in 2 years and will need to be renewed. When I purchased it, I put down 30% and now own 50% of my condo. The value has stayed pretty steady in the last 3 years, but I would lose some if I sold it today. 

I am not sure what I should do with the title. Eventually, when I give my condo to my sibling, their name will be on the title. However, I don’t want to put their name on the title now, as they’ll lose their first time homebuyer grant. If I make a title change when they are living in the residence, they will be able to take advantage of being a first time homeowner, no? People may think I am absolutely bonkers to ‘gift’ my condo to my sibling. But reality is, it has only been us 2 growing up. We have lived on our own since we were in high school and for us to be where we are today, is something I am grateful for. Our economical upbringing would never have allowed me to buy my own place and for my sibling to go to university… let alone achieve a masters degree. We moved around a lot when we were young and never had security, and so I always wanted to build something that was my own. Even if it was just a condo. So, yes I am certain I want to gift my home and help my sibling leverage the money I saved to put as a down payment instead of starting from scratch.

However, when renting, would it be beneficial to have someone who is a BC residence on the title? Does it make a difference if I co-own it with my sibling and I am living in the US but they are living in BC? 

Thanks!


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## the-royal-mail (Dec 11, 2009)

Sell it *NOW*. What you are thinking of doing is way too complicated and involves way too many people. There are many threads here in CMF from people who wanted to do what you're doing. Don't do it. Operate on a clean slate and lower your price until you sell. You're asking too much money. Compare to other listings and come in cheaper than everyone else. Your sibling should look after his own housing in the future. Why put your future in limbo while waiting for his to work itself out?


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## Latito (Nov 18, 2013)

It's confusing that you're trying to sell it now, but plan on gifting it later. Was the plan all along to gift the proceeds of selling to your sibling, or did the idea just come up after it wasn't selling for the price you'd like? Clearly you don't need to money or you wouldn't be gifting it, so take it off the market and pursue that route. If you do need the money, lower your price until you sell and forget that you're not getting full value from it.

Personally I'd suggest that if you are set on giving away real estate the last concern should be that the beneficiary loses their first time home buyer eligibility. They're getting a free condo, they'll be OK.


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## OurBigFatWallet (Jan 20, 2014)

Wouldnt you be a US resident by the time you rent out the condo (assuming you are becoming a US citizen)? Or are you planning on just living down there (resident)? If so as a citizen of BC you'd still have to claim the rental income. And if you co-own then you'd have to claim your share (50%)

I agree with Latito in that the first time home buyers grant is the least of your worries. Bigger issues (in my opinion) are the possibility of a penalty for breaking the mortgage (2 yrs left), taxation with respect to citizenship and realtor fees related to the sale (as well as purchase price - which likely has to be lowered). 

If you need the money now - reduce the price and sell it. But if the equity isnt needed why not rent it out and use some of the positive cash flow to hire a property manager - or better yet manage it yourself or get your sibling to. Then when your sibling is ready you can gift it to them


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## Lights (Mar 3, 2014)

Latito said:


> It's confusing that you're trying to sell it now, but plan on gifting it later. Was the plan all along to gift the proceeds of selling to your sibling, or did the idea just come up after it wasn't selling for the price you'd like? Clearly you don't need to money or you wouldn't be gifting it, so take it off the market and pursue that route. If you do need the money, lower your price until you sell and forget that you're not getting full value from it.
> 
> Personally I'd suggest that if you are set on giving away real estate the last concern should be that the beneficiary loses their first time home buyer eligibility. They're getting a free condo, they'll be OK.


sorry for the double post below… the forum didn't post my reply right away, so I thought it didn't go through. Didn't realize there was a delay.


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## Lights (Mar 3, 2014)

@Latito

I can go either way. If I sell for what I'd like (which is what I paid for it, not a dollar more) then I would gift him some of my down payment. Because I paid off an extra 20% of the mortgage, I can give him enough to put 20% down on his own. Let him invest it and when the time comes, to buy on his own. 

You're right, I'm not in need of the money, which is why I want to gift it to him. I'm just wondering what I should do with the title. I can keep my name on it, but I will be a non-resident. I can put his name on it, but can I put a student with very little income for the next year on the title? I know i'll likely have to pay taxes for the 1 or 2 years until my name is off the title or if we decide to co-own it together. In 2 years, when my mortgage term is up, he will likely just start his first 'out of school' position, though his program has set him up to get a clinical placement pretty much as soon as he graduates. He is in the medical field, so he will do ok. And he's been able to put himself through his masters program without accumulating any student loans or school debt. He just won't be making the money I am making right now… which is why I think I should co-own it with him. Just in case. 

We have paid for our home in the US in cash since the housing prices are a fraction of what they are in Vancouver. My husband and I do okay and we're not desperate if my condo doesn't make us a profit in the next year or two until my sibling can take it over. I just want to know how I can set this up properly and, if possible, make the best decision tax wise.


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## Four Pillars (Apr 5, 2009)

Royal has it right. This is a very bad idea. Just sell it and move on.


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## OhGreatGuru (May 24, 2009)

OP went to some length to explain why she wants to help her sibling financially either now or in the future. So I am not going to argue against that - it's her choice and her money. But trying to do it in this particular manner is unwise as everyone else says. It will horribly complicate her taxes; she may have to pay taxes in both Canada and US on rental income; she may end up having to pay US capital gains tax as well as Canadian when she finally "gives" it away (it will be a "deemed disposition" at FMV as far as CRA is concerned.) Better to sell, even at a loss. Put the money in the bank and help sibling out with a cash gift when he is ready to buy a house.


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## Lights (Mar 3, 2014)

Thank you for everyones reply. It has definitely given me something to think about. 

I think I will likely try and sell it again. It could've been timing (Nov-Christmas time) that it was on the market that was a bit slow. Perhaps things are moving now. 

Any idea what may happen/tax implication wise if I cannot sell it in time of me leaving? If I sell 2 or so months after I have moved to the US? It is my primary residence and I will likely be selling it at a loss, in terms of what I bought it for.


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## Cal (Jun 17, 2009)

Lights said:


> @Latito
> If I sell for what I'd like (which is what I paid for it, not a dollar more) then I would gift him some of my down payment. ....
> 
> I'm not in need of the money, which is why I want to gift it to him.


I don't get the emotional side of wanting to be so firm on selling at a certain price if you don't need the money.

IMO if you don't need the money, just sell, invest the proceeds and give you brother what you want, when you want. If you really think he would like to condo sit there and use the place in 2 years, then just sell it when he is ready to move on to to his next place.


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## OhGreatGuru (May 24, 2009)

Lights said:


> ... Any idea what may happen/tax implication wise if I cannot sell it in time of me leaving? If I sell 2 or so months after I have moved to the US? It is my primary residence and I will likely be selling it at a loss, in terms of what I bought it for.


As far as Canada is concerned, it shouldn't be a problem. The formula for pro-rating the Principal Residence Exemption basically allows you a 1-yr leeway. (Although if you sell at a loss there is no gain anyway. And you can't claim a capital loss on your principal residence.) I can't speak for how the US IRS will treat it.


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## Lights (Mar 3, 2014)

OhGreatGuru said:


> As far as Canada is concerned, it shouldn't be a problem. The formula for pro-rating the Principal Residence Exemption basically allows you a 1-yr leeway. (Although if you sell at a loss there is no gain anyway. And you can't claim a capital loss on your principal residence.) I can't speak for how the US IRS will treat it.


Thanks! This is helpful. I will be re-listing it soon. I realize that I may mean well to help my brother because it's already set in place, but it's likely not the 'easy' way to do it, even though it seems like it could be. 

Selling is my only option and giving him the proceeds of the sale will still help, nonetheless. 

@Cal - whether I need the money or not, if I can get as much back as I put in, I would go that route. Wouldn't you? Just because I am not in desperate need of the cash, doesn't mean I am willing to just give it away to someone else. I am still giving the cash to my brother, so if I can give him as much as I can, I'll do that.


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## Arshes76 (Jul 5, 2013)

Aren't u concerned about the state of the real estate market ? Vancouver has been reportedly falling fast, and condos will be feeling the brunt the most. When spring comes you may find even harder to sell the condo as other people will be listing also. I would sell at what ever price would facilitate a sale sooner than later. Better to lock in your equity than to lose it.


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