[Rola]

I have a client whose mom lived in a house for over 50 years. lately about 7 years ago the house was transfered to the daugther's name but the mom stayed in. no rent was ever collected. in 2007 the house is sold for 265000$. Does the daugther pay capital gain? if yes do we consider the market value of the house plus any expenses occured for transfer as the cost?

[unknown]

Need a lot more info here...

For starters, so we can deal with this efficiently, are you a tax professional?

If not, you should be posting under the Quicktax DIY forums...

Anyone, questions such as:

Did the daughter live in the house herself, or did she have a house of her own?
Was title actually transferred?

[Rola]

Bert_Mulder_CGA, on Apr 3 2008, 01:34 PM, said:

Need a lot more info here...

For starters, so we can deal with this efficiently, are you a tax professional?

If not, you should be posting under the Quicktax DIY forums...

Anyone, questions such as:

Did the daughter live in the house herself, or did she have a house of her own?
Was title actually transferred?

If she lived in the house would I have asked if there was capital gain?
and yes the title was transfered. Like I said transfered 7 years ago the mom was living in the house the daughter paid all expenses.

[unknown]

you did not answer my first question, I noticed....

As I hence do not know your skill level, I cannot adequately answer YOUR questions.

[Rola]

Bert_Mulder_CGA, on Apr 3 2008, 02:50 PM, said:

you did not answer my first question, I noticed....

As I hence do not know your skill level, I cannot adequately answer YOUR questions.

If you really need to know, I don't have any designation . And in this situation you could say I'm no level since this is the first time I go across such one.
I just have my Bachelor degree in business and ten years of public accounting experience.

[unknown]

Then you should know better than asking such a question...??

If she owned the house, and did not live in it, hence could not designate it as principal residence, her goose is cooked.

Maybe mommy will chip in, as she paid no rent...

[Joe]

Bert_Mulder_CGA, on Apr 3 2008, 12:02 PM, said:

Then you should know

It would have been better perhaps if she would have consulted an Accountant (a Designated one) 7 years ago for tax planning, since I can think of a few angles which should fly....

.

[Rola]

Thank you, Great help!

[dunner]

Here are some things to consider. It likely is a capital gain since there was an actual transfer. You should look to see how, if at all, the original transfer was handled on the mother's tax return. If the mother had still paid the operating expenses of the house and had kept an interest in the house (as in the right to stay there as long as she wished), then you might be able to argue that the transfer was only done for estate planning purposes (avoiding probate?) and that the mother did not transfer beneficial ownership of the house. Since you say the daughter paid the expenses, that argument becomes a tough one to make.

Obviously, these are just things to consider and it looks like there's more information to be found. Your client may wish to get an opinion from a tax accountant as to whether the original transfer can be treated as a "non-transfer.

[unknown]

Agree, Dunner, that might be worth considering...

Found that it always helps to have a friendly tax lawyer around...

[JohnV]

Dunner, your angle is certainly worth exploring...and the cost sharing :) arrangement can be seen as that....

Too bad she did not answer Bert's questions that might have lead to understanding more of the daughter's circumstances. I can certainly think of other situations where the house in question could be deemed her principal residence...ie, she was a student, away at school...she is generally away travelling, she is mostly away working in a remote lumber camp or oil rig :) ....

But it seems Rola did not ask the right questions, answer all "our" questions, and got her hackles up.....

Oh well....

And as a side note, if it was a bone fide transfer, why WOULD Mom enter into such an arrangement? On the face of things, someone was not thinking.

[dunner]

Quote

And as a side note, why WOULD Mom enter into such an arrangement?

Tim Horton's tax planning seminars (seminar leader is the guy up the street who "never has to pay tax"). I have clients who ask me every year why they are paying tax and their friend never has to pay tax. I tell them that there are two things people lie about most of all ... sex and taxes. And the lie usually involves too much of one and not enough of the other.

[JohnV]

And the folk tales dunner....

Overheard in a movie line up (or wherever two or more disgruntled taxpayers congregate)

Bob, you know, that guy who operates the garage on MacDonald Street, says the guy who sells him frozen french fries says he knows a guy who owns a chip truck outside of Mellonville who writes off his 5 Corvettes and a Lamborghini as a business expense. Heck if he can, I'm writing off my car.

5 Corvettes and a Lamborghini! Man, the rich get all the tax breaks!

[dunner]

That's a great story John. I may use it some day, except I think the guy lived in Mellonheadville.

[unknown]

You guys get it all wrong, all the time....

The best tax advice is always, well usually, found at the local bar, whatever nameless (of course) guy you are sitting beside...

Had a (ex) client insist I prepare his return that way, as he heard at the bar it should be done that way...

My standard response is always:

I really need to talk to that guy, to get myself an education. Can you get me his name and phone number?

Still waiting....

[davemorias]

'I had a refund last year, how come I don't have one this year, I don't understand". "I spoke with some of my friends and they said I am paying way too much tax"

[David Blue]

The case listed above reminds me of a bunch of estates that came "dying" through my door. Referrals of course, Sons and daughters all or mostly all own homes, Father dies and when changing the title to just the Mother's name for "Estate" purposes all the childrens names were put on the house title Lawyer recommends so they say"every one says that. Then Mommy dies, and the fun begins. What do you mean we now have Capital Gains ? is usually the first question and the second is when they come in after the fact............ I just got a bill from CRA for Capital gains on my Mothers house, "Thats not fair"
This whole case goes on and one, but I am sure everyone will get a laugh out of it. Everyone has that notion that when someone dies there are no taxes. Or We beat the tax man we just have to transfer the house to our name and pay noooooooo taxes. I have heard that a lot. Or the best one, For probate reasons we valued the house at example $ 100,000, at time of death, to save on probate fees, we have now sold the house a year later for $ 350,000.00 we sure got away with that, lololo (Client) What do you mean we have Capital Gains? The house should have been valued at $ 325,000.00 at time of death and for probate.

Have a chuckle.

[davemorias]

David Blue, on Apr 4 2008, 05:26 PM, said:

The case listed above reminds me of a bunch of estates that came "dying" through my door. Referrals of course, Sons and daughters all or mostly all own homes, Father dies and when changing the title to just the Mother's name for "Estate" purposes all the childrens names were put on the house title Lawyer recommends so they say"every one says that. Then Mommy dies, and the fun begins. What do you mean we now have Capital Gains ? is usually the first question and the second is when they come in after the fact............ I just got a bill from CRA for Capital gains on my Mothers house, "Thats not fair"
This whole case goes on and one, but I am sure everyone will get a laugh out of it. Everyone has that notion that when someone dies there are no taxes. Or We beat the tax man we just have to transfer the house to our name and pay noooooooo taxes. I have heard that a lot. Or the best one, For probate reasons we valued the house at example $ 100,000, at time of death, to save on probate fees, we have now sold the house a year later for $ 350,000.00 we sure got away with that, lololo (Client) What do you mean we have Capital Gains? The house should have been valued at $ 325,000.00 at time of death and for probate.

Have a chuckle.

Yeah, but if you move back into the house for 30 days or 6 months or 5 week days and 3 hours on a Saturday then it becomes tax free again.

[David Blue]

I missed that also, SIX hours on a saturday, What was I thinking.