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Hello,

My mom's mortgage is jointly held by me and her (we're both on the title). I have my own residence, but assisted her in obtaining her mortgage approval (she wouldn't qualify on her own). She's now planning to sell her house. Will I need to pay any capital gains even though:
  • I never intended to make a profit on the house
  • She's in my immediate family
  • I never charged her any rent
Should I proactively explain this to CRA or is that unnecessary?

Thanks for your help!!
 

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You ask, Will I need to pay capital gains (on my portion of ownership of the house)?

The answer is yes. You are asking whether you can avoid capital gains tax due to the principal residence exemption (as your mother will have for her portion of the ownership).

Your interest in the house does not qualify you for the exemption - no matter what your intention is - because you did not inhabit the house, and because you already have another PR which you ordinarily inhabit.

The ways around this would have been to co-sign for your mother's mortgage loan, or to loan her cash outright to assist in the purchase, or to gift her cash. What you have done is allowed her to use, at no cost, part of an asset which you also own.

CRA does not care about your intention w/r/t capital gains. They care about your ownership in the house, your cost base, and the capital gain between your ACB and the sale price. Transactions between non-arm's-length parties are subject to more scrutiny and regulation than between arm's-length parties, not less.
 

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I'm thinking about this situation in comparison to the situation where parents try to avoid probate fees by changing ownership to 'Joint' with children. In that case I believe the law is not really clear whether the child 'has bought' an interest at market value, or 'what % the interest is', or whether capital gains is payable on the parent's death/disposition. I believe there are court rulings that allows for an ownership in 'fact' vs 'form'.

If the mortgage was actually paid partly by the OP then I can see she as little to stand on, but presuming the mother paid all the payment, I cannot see that her name on the mtg proves ownership of the asset.

I'm no lawyer, but I think there are some arguments that could be made here in her favour.
 

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If the mortgage was actually paid partly by the OP then I can see she as little to stand on, but presuming the mother paid all the payment, I cannot see that her name on the mtg proves ownership of the asset.

I'm no lawyer, but I think there are some arguments that could be made here in her favour.
I have to agree with leslie on this one. If the OP did not contribute any money to the purchase of the asset, they the OP would have no beneficial ownership for tax purposes.

If the OP did put money into the purchase of the asset, then there would be a capital gain.

However, I would think that it would be proportional. Just like when spouses have an joint investment account, the attribution of tax liability is proportional to their respective contributions to purchasing the asset(s).

Just because your name is on the title, does not mean you "own" the property for tax purposes.
 
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