# Primary Residence and Common Law



## hinder (Jul 14, 2017)

Hi,

I currently live with my "Common Law" partner. 
We do not file taxes together. The only place where we are officially are common law is on his work benefits.
Both our addresses are currently at his house.

I have the opportunity to buy a house on my own. Is there a way I could do it, make it my primary residence to avoid capital gains when I sell it. We will not be getting married any time soon.


----------



## Ag Driver (Dec 13, 2012)

Deleted


----------



## hinder (Jul 14, 2017)

Ag Driver said:


> First things first. Are you actually common law? It varies from province to province. For example, in Ontario you must be living together in a conjugal relationship for three years or more, or one year with a child.


Yes, we live in Toronto, Ontario and have lived together for 1 year.


----------



## Ag Driver (Dec 13, 2012)

Deleted


----------



## hinder (Jul 14, 2017)

Ag Driver said:


> Therfore you are not common law.
> 
> In Ontario you must be living together in a conjugal relationship *for three years or more*, or one year with a child.


So, I am being told by my common law partner that CRA defines it as 1 year.

Can you please elaborate and explain this to me so I can explain it to him. 
Thanks so much


----------



## NorthKC (Apr 1, 2013)

1 year if you have a child together.


----------



## Ag Driver (Dec 13, 2012)

Deleted


----------



## hinder (Jul 14, 2017)

Ag Driver said:


> Ah, you are correct. "has been living with you in a conjugal relationship, and this current relationship has lasted at least 12 continuous months;"
> 
> That muddies the waters a bit. Now I'm curious considering Ontario's views on Common law varies in certain situations.


So what are my options here. 
I feel like you are the experts. Help me out here. 

I am going to buy a property, renovate and sell within a 12 month period


----------



## Ag Driver (Dec 13, 2012)

Deleted


----------



## AltaRed (Jun 8, 2009)

Ag Driver said:


> I find it interesting on a provincial level you are not common law, but in the eyes of taxes you are. I'm as curious as you are now that I know the CRA has a different view on common law. This is something I was unaware of.


That is indeed the case. Family law varies by province and the 3 year (in Ontario) rule is with respect to provincial matters such as OHIP, other provincial family credits and separation/relationship ending matters on division of assets. 

CRA looks at common law only on the basis of federal tax law and that is 1 year of a conjugal relationship. The OP cannot have her own primary residence separate from her partner's primary residence once the 1 year has gone by. The OP and her partner have to start filing income taxes with CRA on the basis of a 1 year relationship. If the one year relationship time period happened in 2016, taxes in 2016 should have been filed on that basis and may need to be revised. One key point of that is....to prevent couples from claiming benefits (as singles) that they would not be entitled to that are 'family income' means tested.

The OP has not said whether she and her partner have a co-habitation agreement in place. It may not be important at the moment if they do not have much in the way of assets, but it will matter over time as assets accumulate. As of the moment, the OP does not necessarily have any marital home because the 3 years are not yet up, but the OP has not said whether she is contributing to mortgage payments, house maintenance and utilities, etc, or whether she is paying rent to the owner. If she is, she may have some claim to a portion of the house in event of a relationship breakup. Once the 3 years are up, in the absence of a co-hab saying otherwise, the OP might have rights to a portion, up to 50%, of the marital home in a breakup of a relationship even if her name is not on title.

IOW, what I am trying to say is that common law relationships operate by a series of rules that vary by province and the OP (and her partner) would be wise to read up on family law in Ontario.


----------



## AltaRed (Jun 8, 2009)

hinder said:


> I am going to buy a property, renovate and sell within a 12 month period


It would not qualify as a principal residence for the period you own it. It would be an investment property.


----------



## heyjude (May 16, 2009)

AltaRed said:


> It would not qualify as a principal residence for the period you own it. It would be an investment property.


Unless she moves into it. In which case, assuming the boyfriend does not move, presumably she would no longer be in a common law relationship.


----------



## Eclectic12 (Oct 20, 2010)

If that is the plan - I'd say the " ... we are officially are common law is on his work benefits" would need to be changed at the same time.

Otherwise, should CRA become aware of the discrepancy - one interpretation could be tax evasion.


Cheers


----------



## AltaRed (Jun 8, 2009)

heyjude said:


> Unless she moves into it. In which case, assuming the boyfriend does not move, presumably she would no longer be in a common law relationship.


Provided there is something like a minimum continuous 90 day separation (or whatever the number CRA uses). She'd have to change all her mailings to her her new address, opt out of her partner's work benefits, no joint accounts, etc. IOW, she'd have to demonstrate pemanent 'separation'. It would take some work to do so, and if she then moved back in with her partner AFTER the flip, CRA would be all over that one. 

Most of us know of the hardships mere room mates go through sometimes with CRA who declare those under the same roof are conjugal couples. Their computers do address matching.

Added from CRA: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/prsnl-nf/mrtl-eng.html



> Common-law partner
> This applies to a person who is not your spouse, with whom you are living in a conjugal relationship, and to whom at least one of the following situations applies. He or she:
> 
> has been living with you in a conjugal relationship, and this current relationship has lasted at least 12 continuous months;
> ...


----------



## heyjude (May 16, 2009)

I'm so glad I'm single! :nevreness:


----------



## mikep (Mar 13, 2017)

can anyone elaborate on my situation?
I have rental properties purchased in 2013-2015.
condo purchased in 2014.
moved into the 2014 condo with partner in may 2016. (was renting it out for 2 years before that)
purchased last rental property new construction closing this month. 

is she entitled to any of my stuff? 
I'm in Ontario. 
and also do we have to file our taxes next year and check off common law?


----------



## AltaRed (Jun 8, 2009)

You have to check off common law for your 2017 tax return if you stay in your conjugal relationship.

I am not familiar with the specifics of Ontatio family law BUT once you are common law under Ontario Family Law in 3 years (May 2019), then in the absence of a co-hab agreement saying otherwise, I'd say she is entitled to 50% of the matrimonial home in event of a separation/relationship dissolvement. There may be some specific circumstances where a court might decide otherwise, e.g. you personally have the paper trail to say you are paying for all condo related items, e.g. mortgage, condo fees, property taxes, home insurance. You'd have to dig into the specifics.

Note: ANYONE who is contemplating going into a common law relationship should read the Family Law act in the province of residence BEFORE making that commitment.... and get into a co-hab agreement epecially if there is considerable asset disparity between the 2 individuals. My "spouse" and I entered into a co-hab as a result of our common law relationship. We also have our shared house in 50/50 tenants-in-common title (rather than joint title) so that our individual share of the house goes to the estate rather than a surviving joint owner. We did that because we got together after retirement and we each have our own families (children and grandchildren) to consider. Relationships are a business...whether anyone wants to admit it or not, albeit dynamics can be quite different with young couples, and especially young couples raising their own children together... in which case, it is virtually a true marriage when it comes to property division.


----------

