When two people are on the title to a condo, who pays capital gains?

When two people are on a condo title, who pays capital gains?

Figuring out who “owns” a property is key


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Q. I purchased a condo in Saskatchewan in 2001. I was young, and because I had a lower income than usual that year, my father co-signed for the mortgage. If I sell the condo with my dad on the title, will he be subject to the capital gains tax? And if so, can I get him off the title prior to a potential sale and avoid any capital gains tax?


A: The entire concept of ownership in the Income Tax Act is intriguing, as there is no clear definition of the term. For tax purposes, however, capital gains are reported on the tax return of the beneficial owner of the property—the person who has legal ownership and enjoyment of the property as well as the legal title.

In Interpretation Bulletin 170R, the CRA describes beneficial ownership as having possession, use and risk as its primary attributes. Taking responsibility for insurance coverage, interest costs and entitlement to any income from the property all are considered indicators of ownership.

Resulting income taxes, therefore, are paid by that beneficial owner. That would be you, not the co-signer.

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Evelyn Jacks is president of Knowledge Bureau, which offers e-learning at knowledgebureau.com. Evelyn tweets @evelynjacks and blog at evelynjacks.com