# Helping my son with downpayment on condo - should my name be on the title?



## jimbob.seeker (Sep 12, 2013)

I am providing a significant portion of the down payment for a GTA condo that my son is about to purchase.

The down payment is big enough to allow him to manage the mortgage on his own (barely).

He is gainfully employed but he doesn't make enough money to buy the condo on his own.

He is in his mid twenties and is currently single.

The plan is to rent the condo for about five years and then he will sell it for something better or possibly move into the condo.

Are there any good reasons to have my name on the title?

Are there any good reasons not to have my name on the title?

Any and all comments would be greatly appreciated.

Thanks,
JimBob


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## kcowan (Jul 1, 2010)

I would not be purchasing a condo in the GTA or GVA right now. Now is a great time to rent until all the government interference works its way out of the pricing.

If my son convinced me that I should do this for him, I would be the sole name on the title since he would just be renting the money to make up the difference.

Because he is young, there are many twists and turns possible in his life, like getting married that could influence his financial picture.

JMHO as I have two sons in the GTA. I encouraged them to be independent. This came with a price that I was willing to pay.


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## tavogl (Oct 1, 2014)

Agreed with the above post. Make your kid independent, if you take away his needs/wants what's his motivation to make more money? He needs to feel the struggle and use it as fuel to better himself and his career.


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## birdman (Feb 12, 2013)

We have 2 boys one of which who graduated from an out of town university and one who started work after graduating from high school. The one from university secured a job back here after graduation and moved back home. After their schooling was completed we charged them a nominal room and board; I think it was about $100. a month in those days. Neither were a problem but in due course and in both instances I insisted they get out on their own and I suggested the purchase a condo and get a room mate. I even went a bit further and mentioned that their room and board would double in 3 mos and then go up again by another $100. in 6 mos. I also offered to lend them most of the down payment of $20,000. interest free. The numbers (mortgage, roommate income, etc) worked easily and away they went. Probably a bit of a shock to them at the time but it worked out well with them getting into the market, becoming independent, and learning responsibility. Maybe we were lucky on the timing of the purchases but they both made reasonable money on the eventual sale and repaid my loan. Even though they now have moved away they have since always been in the market (sometimes with some help again) and are married with children. All loans have been repaid. In my opinion its too easy to just live at home until your 30's and beyond and getting into the market asap is important providing the timing and market are right. If you trust your child I would not go on title and inherit the liability in case of a drastic market downturn and it would enforce the point that it is his responsibility. The amount we lent our children was certainly affordable and we have recently gifted it back to them.


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## Just a Guy (Mar 27, 2012)

I just had that very conversation with my lawyer for my son’s property.

The reasons to be on the title...

1) you want to get your money back at some point. Being on title gives you a claim.

2) preserving ownership. If he gets married or even moves in with someone, they can have a claim on the property and it’s income. This got very messy in the conversation and morphed into prenumpts and cohabitation agreements which was more important. 

3) income splitting 

4) estate transfer

Those were the main reasons to be on title. None of them really applied to us, so I remained off. 

As for buying a place in GTA that they can barely afford (did you include condo fees, insurance, taxes, etc?) hoping for capital gains...losing money every month as a rental (don’t forget you’re not earning anything on the downpayment). I wouldn’t do it. The market will eventually correct, prices will go down and you’ll lose your shirt.


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## Mukhang pera (Feb 26, 2016)

Probably kcowan is right about timing.

As for dad on or off title, there is no clear answer without a lot more background information, coupled with a certain amount of crystal ball gazing. But no dad on title is an open sesame to family property claims should son move a spouse (common law or otherwise) into the premises. There are endless permutations of what can flow (partly dependent on in what jurisdiction the property is situate), but here's one example of what can take place:

Yang v. Zhang, 2017 BCSC 524:

MATRIMONIAL PROPERTY — Reapportionment • GIFTS — Resulting trusts — Rebuttable presumption • CHILDREN — Maintenance — Ability to pay • Retroactive orders • MAINTENANCE — Entitlement • Retroactive orders — Parties separating in 2012 after marriage of 3 years and birth of one child — Parties living in house owned by husband, whose mother provided the down payment of $100,000 — Wife rebutting presumption of resulting trust — Court finding the house a family asset, with the equity of $474,000 reapportioned 80/20 to husband — Court ordering husband to pay setoff amount of child support, retroactive to separation — Court also finding wife entitled to maintenance, given her immigration from China after the marriage, her limited means to support herself, the very young child partly in her care — Court setting support period at 7 years, commencing at separation.

The full text url follows. The judgment runs to 56 pages. The most relevant discussion may be found at para. 48 _et seq._

https://www.courts.gov.bc.ca/jdb-txt/sc/17/05/2017BCSC0524.htm

If you decide to proceed with no dad on title, I would suggest a signed agreement with son in which son acknowledges that the down payment advanced by dad is a loan, not a gift, to be repaid on any eventual sale of the property. That's one possibility. There are others.

Another consideration that arises stems from the idea of the premises being rented. Tax considerations arise. If dad's $ was used for the purchase, dad should be reporting any income (loss). Perhaps not within the scope of this reply to be offer much in terms of tax planning.


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## Longtimeago (Aug 8, 2018)

For me this is an easy one. I don't believe in the bank of 'mum and dad' at all. I believe in financially supporting your children right up until they leave their education. At that point, they are on their own. If continuing to live in the family home, they will have to pay a reasonable room and board just as they would if they moved out. I think the way frase told their two that it would escalate was a good way to handle that part but I would not hand over a down payment at all.

Let me ask you a few questions jimbob.seeker. Where is your son living now? If he has a job, why can't he save up for a down payment if he wants to buy a property? If he can't afford to buy on his own, which part of 'can't afford' is it that you don't want him to understand?

We as parents, teach our children lessons as they grow up. You can teach them the 'bank of mum and dad' lesson or you can teach them the 'stand on your own two feet' lesson. It is a mistake to think you are teaching them the latter when in fact you are teaching them the former.

I am not suggesting that in a dire emergency, a parent should abandon their child but I am most definitely suggesting this scenario you are talking about is not a dire emergency.


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## Numbersman61 (Jan 26, 2015)

It depends on the circumstances. My wife and I have six children and have contributed to a home purchase for each one. Prime reason is that we can afford to make the gift because of our financial situation and we believe that home ownership is important. In the case of one son, who is unmarried, my wife is on title with him.


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## jimbob.seeker (Sep 12, 2013)

Hi 'Longtimeago',

You asked ...

>> Let me ask you a few questions jimbob.seeker. Where is your son living now? If he has a job, why can't he save up for a down payment if he wants to buy a property? If he can't afford to buy on his own, which part of 'can't afford' is it that you don't want him to understand?<<

My son is currently living with us and saving about 90% of his salary to put towards the down payment. He has a decent job but he has not been able to save fast enough to keep pace with the GTA price increases. He has saved a substantial amount but it will not be enough to buy anything decent. For job reasons, he needs to live in the GTA for the foreseeable future.

Your points are all valid and appreciated.


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## OhGreatGuru (May 24, 2009)

jimbob.seeker said:


> I am providing a significant portion of the down payment for a GTA condo that my son is about to purchase.
> The down payment is big enough to allow him to manage the mortgage on his own (barely).
> He is gainfully employed but he doesn't make enough money to buy the condo on his own.
> He is in his mid twenties and is currently single.
> ...


Having re-read your post more carefully, it appears that this is intended to be an income property, not his residence. It's complicated enough if this is his principle residence.

I will avoid the question of why you would lend your son money for investing. But if this is a business arrangement, treat it as one. You should both be on title, with the percentage of ownership divided according to how much each of you puts into the purchase (tenants in common). The profits, if any, are similarly divided (and taxable) between you.

PS. The way in which you have phrased the scenario raise all kinds of questions about whether the mortgagor knows this is not an owner-occupied building; that a second person has a financial claim on it (or part of it); and whether this is mortage fraud. But I won't go there pending further clarification.


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## jimbob.seeker (Sep 12, 2013)

OhGreatGuru said:


> Having re-read your post more carefully, it appears that this is intended to be an income property, not his residence. It's complicated enough if this is his principle residence.
> 
> I will avoid the question of why you would lend your son money for investing. But if this is a business arrangement, treat it as one. You should both be on title, with the percentage of ownership divided according to how much each of you puts into the purchase (tenants in common). The profits, if any, are similarly divided (and taxable) between you.


Hi GreatGuru,

Thank you for your response.

My son reckoned that he would have enough saved to get into the market on his own in about five years but only at today's prices. Considering the blistering rate at which GTA properties have appreciated in the last 10 years, he is worried that the price appreciation in 5 years will exceed the amount that he can save. He plans to move into the condo in about five years. In the mean time, he will continue to live "at home" and save while the rent pays for a portion of the financing and maintenance charges.

Buying the condo now, and renting it out, is a way of getting into the market before it becomes totally unaffordable.

So for five years it will be an "income" property and after that, it will likely be his residence. From what I have seen, he will not be able to generate a positive cash flow. He will be in the red by one to two hundred dollars.

My son was just approved for the mortgage and he fully disclosed that the condo will be rented. Additionally, the mortgagor was provided with the sources of the down payment funding. Good points, thanks for raising them.


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## Mukhang pera (Feb 26, 2016)

jimbob.seeker said:


> Hi GreatGuru,
> 
> 
> My son was just approved for the mortgage and he fully disclosed that the condo will be rented.


We'll trust that he has checked and that the rules of the strata corp. permit rentals.


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## lonewolf :) (Sep 13, 2016)

Your name should be on the title unless your in really bad shape & will need care in a nursing home in the near future. The government will cover the costs if you can not afford to pay.


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## jimbob.seeker (Sep 12, 2013)

Mukhang pera said:


> We'll trust that he has checked and that the rules of the strata corp. permit rentals.


Yes, he checked the Status Certificate from the Condo Corp and he is allowed to rent the unit.

I already acted on one of your previous suggestions. I had a discussion with my son about the "loan agreement" and the idea was received favourably. However, we haven't ruled out having one parent on the title yet.

I also read the sad story of Yang v Zhang.

Mukhang, thank you for your very thoughtful and insightful responses.


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## Mukhang pera (Feb 26, 2016)

jimbob.seeker said:


> Mukhang, thank you for your very thoughtful and insightful responses.


Most welcome. Best to you and son for future.


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## Rusty O'Toole (Feb 1, 2012)

As the property is to be a rental, suggest you look at this as an investment.

Investor (you) puts up 25% down payment and gets 50% ownership of the property.

Owner (your son) puts up no down payment, takes care of renting property, makes all payments, repairs, pays all bills.

If or when the property is sold, you get back your down payment plus 50% of any appreciation or profit. If you wish you could put in your agreement that this agreement is for 10 years, if at that time the property is not sold, it can be appraised, Owner takes over full ownership by paying you your down payment plus 50% of appreciation. By that time it should be a cinch to refinance for enough to do this with Owner paying nothing out of pocket.

Done right, your son should be able to get into real estate with no down payment and no monthly payment as the rent will cover the payment. Your agreement should be in writing and you should be on the deed as co owners.

PS on re reading your original post it is not quite clear if you mean the property will be rented to a 3d party or if your son will be the renter. It doesn't make much difference, if your son (Owner) lives in the property the money he would normally spend on rent, will become the house payment. And if you have a 5 year term mortgage his rent will never go up.

PPs I see on re reading some other posts, that you intend to rent out the property for 5 years. How much will it rent for, and how much is the mortgage payment and condo fees? Your son should be getting a very cheap investment here, and good for him if he does. I could only add be very choosy about who you rent to. The only thing worse than trying to get a good tenant into a rental, is trying to get a bad one out.


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## Just a Guy (Mar 27, 2012)

In talking to my lawyer about my son’s property. Even though he doesn’t plan to live in it, he can declare it as a principle residence and negate any capital gains tax until he buys a place to live in. I didn’t know you could do that until he bought his property, but I guess you don’t need to live in it.


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## Numbersman61 (Jan 26, 2015)

Just a Guy said:


> In talking to my lawyer about my son’s property. Even though he doesn’t plan to live in it, he can declare it as a principle residence and negate any capital gains tax until he buys a place to live in. I didn’t know you could do that until he bought his property, but I guess you don’t need to live in it.


You have received inaccurate information. In order for the property to qualify as a principal residence in a year, you must occupy it for at least part of the year. You cannot claim a rental property as a principal residence.


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## Mukhang pera (Feb 26, 2016)

Numbersman, I would say you are right. How can a "principal (not principle) residence" be something in which one has never lived? One of the more idiotic notions this kid has ever heard. I think JAG needs new counsel and should report the guy who gave that lunatic advice to his provincial law society. Even my teenage son knows what it takes to constitute a "principal residence", as defined by the CRA thus:

https://www.canada.ca/en/revenue-ag...ncipal-residence/does-a-property-qualify.html

JAG's lawyer is beyond incompetent. Mentally ill, perhaps, but not someone who should be charging money to advise the public.


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## Just a Guy (Mar 27, 2012)

I didn’t really believe it, wasn’t something I was going to try, just goes to show why I don’t totally trust any lawyer.


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## GreatLaker (Mar 23, 2014)

Numbersman61 said:


> You have received inaccurate information. In order for the property to qualify as a principal residence in a year, you must occupy it for at least part of the year. You cannot claim a rental property as a principal residence.


Yes.

One test that CRA uses is the "Ordinarily Inhabited Rule".
https://www.canada.ca/en/revenue-ag...olio-s1-f3-c2-principal-residence.html#N10303



> 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.
> 2.11 The question of whether a housing unit is ordinarily inhabited in the year by a person (that is, the taxpayer, the taxpayer’s spouse, common-law partner, former spouse, former common-law partner or child) must be resolved on the basis of the facts in each particular case. Even if a person inhabits a housing unit only for a short period of time in the year, this is sufficient for the housing unit to be considered ordinarily inhabited in the year by that person.


I had a recreational property that I ordinarily inhabited on weekends in the summer while living in an apartment in the city. I was able to claim that as my PR. Then I bought a place to live in as primary residence, but was still able to pro-rate the capital gains on the rec property for the time I claimed it as my PR.

But I would not try claiming a place I owned and rented out as PR.


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## ian (Jun 18, 2016)

Here is another pass at this. Several years ago we had a conversation with two accountants. One was our accountant, the other a specialist in tax. It was a very casual meeting. We happened to say at one point that we might assist our son and his gf to buy a condo. 

Immediately the tax specialist told us that just last week she had attended a legal session for CA's dealing with this exact issue. It has become an issue in our jurisdiction=Alberta. It basically goes like this. Parents spring for a good portion of the home for child and partner. Or, just the child but before long the child starts co-habitating. Fast forward... they split. The significant other want half of the assets, including the equity in the home. Not certain how if this is an issue in other jurisdictions. 

Net net was that the tax specialist advised us very strongly to get legal advice in terms of how to set this up so that a parents contribution cannot be sliced in half in the event of a break up in a rather short term relationship. She gave us a few casual examples of similar disputes that were currently underway. The money was much larger that what we were offering but the bottom line was the same. Protect yourself and protect your son or daughter whatever the case may be. We were quite taken aback by her comments but decide to follow her advice should we be in that situation. 

My guess that one solution could be a second mortgage in the parent's name. But this is simply a wild guess.


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## Just a Guy (Mar 27, 2012)

Cohabitation and/or prenuptial agreements were the suggested solution to us.


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