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Hello,


I am married and own a home. My wife lives with me, but is not on the title of the home that we live in. I also bought a preconstruction condo which will be closing in about a month. My wife has been on maternity leave for the past 10 months so her income for this tax year is significantly less.

Would it make sense to transfer the purchase of the preconstruction condo to my wife, ultimately making her the sole owner of it with the intentions of selling it right away. Would the capital gains be filed only as my wife's income (and taxed at a lower bracket) and would she be able to use her first time homebuyer tax credit?


thank you
 

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Would the capital gains be filed only as my wife's income (and taxed at a lower bracket) and would she be able to use her first time homebuyer tax credit?
The CRA would want the capital gains to follow the party(s) that contributed money to the original purchase. You'd have to search your own souls to know what % is attributable to her capital input vs yours. Merely changing the title does not change the capital gain attribution.

Regarding the tax credit:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-369-home-buyers-amount.html

You can claim $5,000 for the purchase of a qualifying home in the year if [ ... ] you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years
Since your wife lived with you in your principal residence, she is out of luck for the tax credit too.
 

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IOW, under attribution rules, she needs to be able to show that that the funds used for the pre-purchase were her funds, not yours.

If income-producing property, or money which is used to purchase income-producing property, is transferred or loaned to a spouse, either directly or indirectly, or by means of a trust, the income and capital gains from the property will normally be attributed back to the person giving the gift or loan. When spouses have a joint investment account, the income from that account should be claimed by each spouse based on their contributions to the account. If the contributions are made 50% by each spouse, then the split will be 50/50. It is necessary to have records that will substantiate the contributions by each spouse.
https://www.taxtips.ca/personaltax/attributionrules.htm
 
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