Tax on sale of son’s college home
Question: Three years ago we helped our son purchase a home in another city for him to live in while at university. The down payment and all subsequent mortgage payments have been made by him. He has now finished and is contemplating moving back to Calgary which would mean selling the house. The house and the mortgage are in our names.
Will the sale of the property result in a capital gain for us? Can we transfer the property to him (or sell it for $1 to him) and transfer the mortgage into his name? – S.T. P.
If the house is in your name, you are the legal owners. Since it is not your principal residence, it appears you will be liable to pay tax on any capital gain resulting from the sale. If your son actually paid for all the costs involved, this is very unfortunate.
Transferring ownership to your son will not help matters as it will be seen as a “deemed” sale by the Canada Customs and Revenue Agency and taxes will still apply.
Having said that, let me stress that I am not a tax lawyer. I suggest you obtain professional advice on this matter, especially if a significant amount of money is involved. Perhaps if evidence cane shown that your son actually paid for all the costs from his own pocket (not using money from you) there may be a legal loophole.- G.P.