What are the taxes on transferring real estate to your kids? Jun 27th

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What are the taxes on transferring real estate to your kids?

– moneysense.ca

We purchased a condo for our son, who has been using it as his principal residence for over 10 years. He has made improvements, but the title is in our name. We would like to transfer the title to him, as he is now getting married.

How do we determine fair market value in a fluctuating market? He will not be paying real estate fees. Are we able to gift a portion? Is it better to spread capital gains over five years? We are both retired on a fixed income. Is rent-to-own a better way to transfer?

—Joan

Claiming the principal residence exemption

When you transfer a capital asset like real estate to a family member, the transfer takes place at the asset’s fair market value, and capital gains tax is calculated accordingly.

In Canada, the principal residence exemption allows the sale or deemed sale of a qualifying home to be tax-free for a taxpayer. A transfer to a child would be considered a “deemed disposition” based on the property’s fair market value, meaning capital gains tax as high as 27% of the property appreciation could apply—that is, unless it could qualify as a principal residence…

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