Whether you want to retire, leave a legacy or simply plan for what happens after your death, successfully transferring business ownership to your children takes more than a little thought and planning. If the child . This approach was confirmed by the Supreme Court of Canada in the case of Pecore v. Pecore where the court made a decision that this presumption applies in the case of property transfers as between parents and their adult children. The house will also not be subject to Medicaid estate recovery. One is that it might help to reduce the inheritance tax potentially owed if they already own a share of the property. The second issue for James is that he owed tax to the Canada Revenue Agency at the time he transferred these properties to his kids. The child is resident in Canada immediately before the transfer. Save. Will I pay land transfer tax when my parent(s) later conveys legal title to me? Only the equity in the land after the child buys it can be claimed by the spouse. The value of the land is protected. The bank requires that my mom/dad be on title to my mortgaged property. This does not necessarily require a refinance, but that is the easiest way to do so. I am assuming the transfer will be considered a gift, which means deemed disposition at FMV. But as with any other real estate transaction, it’s important to move past emotion when deciding what will happen to your abode in the future. Understanding the Title . The Internal Revenue Service doesn't make provisions for other tax-free transfers of a home, even if you're giving it to another family member such as your child, parent or cousin. The person who owns a piece of property is said to "hold the title." "Farm property" is property used in the business of farming and includes land in Canada, depreciable property in Canada of a prescribed class and eligible capital property of a business carried on in Canada. Transfer ownership of the home to a life estate, in which case your child owns the home when you die without it passing through probate. Gifting the property deed does nothing to transfer the debt of the mortgage. How registering your adult child to the title of the family home can cost you . Another method of transferring property is to put it into a trust. In the case of a bank account, the new joint owner can drain the funds or otherwise misuse them if he or she has sole signing authority; and in the case of real property, decisions regarding the property have to be made jointly. There are a few good reasons to consider transferring your property deed to your child while you’re still alive. One of the biggest disadvantages of transfer to joint ownership is the loss of control of the property by the original owner – leading to a host of possible problems. Transferring farm property to a child or children You can also transfer qualified farm property to children on a tax-deferred basis at any time under certain conditions. Think about IHT implications – “potentially exempt transfer” If you were to make an outright gift of the house to your child in a bid to reduce the value of your estate, it would be treated as a “potentially exempt transfer” for the purposes of IHT. To avoid taxes, the property must be the primary residence of the owner and spouse. We have 2 options one is a prenuptial agreement and the other is to transfer the property to the 3 children at 25% ownership each, leaving the remaining 25% with my Father. That being said, many home transfers are not subject to tax. If the parent did not acquire a beneficial interest in the property as a result of the conveyance, the Ministry of Finance may accept the fact that the parent was on title as a trustee for the child. Careful consideration should be taken before gifting property in Canada so you can avoid the potential pitfalls from a Canadian income tax perspective. During financial literacy month, Canada's top money bloggers are sharing their best piece of advice. If you were to die within seven years of gifting, then the property would fall back into your estate for IHT purposes.