Owning a house in Canada

cfr · Post by **cfr** » Tue Oct 24, 2006 8:53 pm

I lived in Canada my whole life pretty much and moved to the U.S. four years ago. I am a dual-citizen.

Before I left Canada to move to the U.S., I owned a house (title in my name) but really I own 85% and my parents own 15%. When I left, at someone's advise, I legally transferred the house to my parents name and they had their attorney draw up two wills which leave me 85% of the house in the event of their death. I did this to sever my ties with Canada so I would not still be deemed a resident for tax purposes.

They are living in the house now and not paying any rent. They had the bank talk them into opening a line of credit on the house which they have run up to 40K. Now I am getting nervous. I would like to protect my share of the house better. I was never really that comfortable with the transfer but it was a rush at the time.

Can anyone assist me with the best way to protect my share of the house? I am willing to eliminate the line of credit with my own money before I do anything....I really would like the house back in my name but I don't know if that is possible since they don't pay me rent....Are there any other options out there?

Thanks alot, Chris

nelsona · Post by **nelsona** » Wed Oct 25, 2006 11:06 am

First off, while it may have sounded reasonable to divest yourself of the house to avaoid Cdn taxation, the US/Canada treaty would have protected you anyways, since by moving to US, working there, having taken out citizenship would have absolved you on Cdn tax on your US income. -- bad advice back then, and worse now.

It would have made the treatment of your Cdn house a little more complicated, but not any more so that if tyou had remained in canad under the same arrangement.

Now, the house is 100% theirs -- that bank certainly thinks so -- and their is little you can unilaterally do.

I'm unsure why you have this 85/15 split cast in stone, but it certainly would be simpler for ONE party to own the house -- as it is now.

You are quite free to buy the house back and treat it as a cottage that your parents lie in rent-free. You will be taxed on it on that basis, or you can just live with thge arrangement as it stands, realizing that you will get the house TAX free, but with a huge debyt attached to it. Your (and your parent's) choice.

But, to others: there is absolutely NO NEED to sell or even rent out a Cdn home to break tax residency if you are going to live and work in the US, so long as you bring your dependants with you, and quickly esatablish the same or more ties in US that you had in Canada.
This has not always been the case, but has been since about 1998.

cfr · Post by **cfr** » Wed Oct 25, 2006 8:28 pm

Thanks for the advise. Yes, now I realize how much of a hole I've dug for myself.

The 85/15 split occurred when I originally bought the house. My parents put up 15% and I put up the rest but the house was just put in my name.

I may take on the debt on my side through my own equity in the house I own here in the u.s. and see if I can get the house back in my name.

I will speak to my accountant as to how to treat the house when it is back in my name.

Thanks again

nelsona · Post by **nelsona** » Wed Oct 25, 2006 9:41 pm

By accountant, I trust you mean one single cpa who does both your Us and Cdn taxes together.

cfr · Post by **cfr** » Thu Oct 26, 2006 12:50 pm

Correct