USA Resident buying property in Can.

[tember]

We are Canadians living in Seattle since 2019. My adult daughter still lives in Canada. My teenage daughter has decided to return Canada to go top university. We plan on purchasing an apartment for both girls to live in. We are using recent inheritance in Canada to pay cash for the property.

We have decided that putting my adult daughter's name on title is the safest (in terms of tax implications) and easiest way to proceed. So she has made the offer and she will be on title. We were advised to create a personal mortgage to lend her the money so that there is a registered Lien against the apartment. This is to try and buffer against the risk of my daughter owing money to someone (for example, through a divorce).

Our questions:
- would it be better to the put the apartment into my name? How would this affect our residency status in the eyes of Canada Revenue Agency (CRA)?
- will setting up a personal mortgage have any effect on our residency status in the eyes of the CRA? Are there tax implications for having a mortgage and accepting payments against?
- are there other factors I have not thought about?

[nelsona]

I won't comment on the other aspects of your post, but be assured that simply buying property, or setting up some kind of loan in Canada does not make you a resident, as long as you continue to live in US,

[tember]

Hi Nelsona - thanks for replying. We were given lots of warning words from our initial accountant that having too many residential ties to Canada could flag us to pay income tax in Canada. We already own a vacation property in BC and have a Canadian mortgage against it. So we haven't fully severed ties with Canada - although I no longer file Canadian tax returns.

We are worried that putting the apartment in my name renting it to my daughter would be flagged as another "residential tie". We have no idea if setting a mortgage to lend her the money to the purchase would count as a residential tie. I am glad to hear that you don't think it will. Do you think there would be any Canadian tax implications of setting up a personal/private mortgage?

fyi - our "initial accountant" was part of our relocation package. We received 2 years of accountant services to file taxes in USA and Canada when we first moved down here. This was also during Covid, and we moved back to Canada for part of 2020/2021 - so I am sure that muddied the waters.

Thanks for you input!

[nelsona]

Again, as a US resident you can own property in Canada without fear of being considered a Cdn tax resident. The number of properties does not matter, since they are NOT your residences.

[tember]

Thanks again for your response. We were able to get some professional advice - but they couldn't answer one question.

I received a substantial inheritance in Canada ($300K) - we will use this money to purchase the apartment. My daughter is going to be the apartment owner and it will be her primary residence - so essentially we are gifting her the money to buy this place. This money was an inheritance in Canada, the money has stayed in Canada, and will be gifted to a Canadian citizen/resident. I however, am a USA resident on a TN Visa since 2019. Will I be charged gift tax on this? How do I navigate or minimize this?