A recently released July 14, 2023 Technical Interpretation reviewed whether a taxpayer remained the beneficial owner of 100% of her residence after adding her two daughters to title for nominal consideration. Her daughters had signed an acknowledgement that the intention was not to gift the property to them, but rather that the property would pass equally to all six of the taxpayer’s children on her death. The taxpayer paid all costs related to the property and neither daughter lived in it.
CRA noted that the beneficial owner would report all gains on the property and could offset those gains using the principal residence exemption. All relevant factors must be considered to determine beneficial ownership, including the following:
• the rights to:
o possession;
o collect rent;
o mortgage the property;
o transfer title to the property (by sale or by will);
• the obligations to:
o maintain and repair the property; and
o pay property taxes related to the property.
CRA noted that this was not an exhaustive list of relevant factors, and that all relevant factors must be considered to determine beneficial ownership. However, CRA opined that, based on the facts provided, the taxpayer was likely the beneficial owner throughout her lifetime, with no disposition when her daughters were added to the title.
ACTION: Adding an individual’s name to the title of a property could result in a number of tax consequences. Prior to any such action, consult a professional for guidance to ensure the intention behind such actions are properly documented and the tax implications understood.
