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Ownership of Property - how would it affect me?

Ownership of Property - how would it affect me?

Old Aug 16th 2021, 9:12 am
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Default Ownership of Property - how would it affect me?

In need of some help please. I'm currently in UK. My wife is in Canada - she's a PR there.

I might be applying for spousal sponsorship next year. I am going to chip in and support my wife in purchasing a house in Canada. She said if my name was on the ownership of the property then I may need to declare it and pay tax as a foreigner... is this true?

I want to build a strong case for spousal sponsorship so my question is, does having my name on the property have an impact on tax declaration in Canada/UK? Also will having my name on the ownership mean that I use up my first time buyer allowance for Canada? Will I need to declare it at customs at either border?
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Old Aug 16th 2021, 10:19 am
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Default Re: Ownership of Property - how would it affect me?

Originally Posted by dangboby
In need of some help please. I'm currently in UK. My wife is in Canada - she's a PR there.

I might be applying for spousal sponsorship next year. I am going to chip in and support my wife in purchasing a house in Canada. She said if my name was on the ownership of the property then I may need to declare it and pay tax as a foreigner... is this true?

I want to build a strong case for spousal sponsorship so my question is, does having my name on the property have an impact on tax declaration in Canada/UK? Also will having my name on the ownership mean that I use up my first time buyer allowance for Canada? Will I need to declare it at customs at either border?
Hi
Where are you planning on buying the house? there are large areas around Toronto and Vancouver where a foreign buyers tax applies - it is a tax of 15% of the purchase price, is this what she means? There are exemptions and (in Ontario at least) being a foreigner who purchases jointly with a Spouse who is either a citizen or permanent resident in Canada is one of them - to qualify for the exemption though it has to be your primary residence. Relevant section of legislation below.
  • Spouse – A foreign national who jointly purchases residential property with a spouse, who is a Canadian citizen, permanent resident of Canada, nominee or protected person.Under the Land Transfer Tax Act, spouse means “spouse” as defined in section 29 of the Family Law Act. This includes either of two persons who are married to each other, or who are not married to each other and who have cohabited,
    1. continuously for a period of not less than three years, or
    2. in a relationship of some permanence, if they are the natural or adoptive parents of a child.
To qualify for an exemption, the foreign national (and if applicable their spouse) must certify they will occupy the property as their principal residence.
If you buy a house I think you can safely say that you will no longer qualify as a first time buyer if you buy another house. Also the definition of 'First Time Buyer' is different for the various schemes that offers incentives eg. for the land transfer tax rebate (like Stamp Duty) the definition is must never have owned a property anywhere in the world, and your spouse can't have owned anything either during the time you were married. Other schemes have less rigorous qualifications.

There are implications when a non resident sells a property in terms of Capital Gains Tax. Principal residences are exempt but if you buy and don't end up moving in then there is likely to be an amount owed if it sells at a profit. For foreign sellers unless the proper paper work is filed upon closing to show how much CGT is owed then the maximum possible amount will be held back until it is calculated, so you may have to wait quite a while for a significant chunk of your money upon sale - you would need to speak to an accountant about that to be certain of your exact obligations because as always it is complicated and there are means to mitigate (beyond my paygrade). Edit to add - I don't know what the exemptions for co owning with a Spouse who is a permanent resident would be here, if all pans out as you describe - ie you get Spousal sponsorship and move over then it will become a moot point if you live in the home.

Last edited by HGerchikov; Aug 16th 2021 at 10:22 am.
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Old Aug 16th 2021, 11:02 pm
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Default Re: Ownership of Property - how would it affect me?

HGerchikov Very informative post above and I may I ask if owning a home means that one spouse or more has their name on the deeds/mortgage? In my case our property in the UK is in my name although wife has obviously lived here since our marriage. Can we use this technicality to better our chances in Canada for not having to pay land transfer tax and claim a rebate? I am suspecting not but ask the question seeing as you have local knowledge?

Many Thanks
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Old Aug 17th 2021, 12:21 am
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Default Re: Ownership of Property - how would it affect me?

Originally Posted by dogstar
HGerchikov Very informative post above and I may I ask if owning a home means that one spouse or more has their name on the deeds/mortgage? In my case our property in the UK is in my name although wife has obviously lived here since our marriage. Can we use this technicality to better our chances in Canada for not having to pay land transfer tax and claim a rebate? I am suspecting not but ask the question seeing as you have local knowledge?

Many Thanks
I am not now, nor have I ever been, HGerchikov but I don't think this works:

1. Not being named on the deed isn't quite the same as not owning. In the event of a domestic split, the unnamed spouse still has a claim on half the house. Whether or not that counts as "owning" in the specific context of the Canadian government's interpretation of UK domestic law is not a hair I would want to split with that government.

2. In order for the spouse who was unnamed in the UK to count as a first time buyer in Canada, that spouse would have to be the only name on the deeds of the first house in Canada. If the income of the other spouse is needed to qualify for a mortgage the bank isn't going to go for that arrangement.

Generally, in dealing with the tax department and with banks, I think it sensible not to be unusual in any way. Don't be interesting. You don't want to meet the tax auditor or the bank's committee for consideration of extraordinary proposals, you want to be approved blandly. Already you're an immigrant with no local credit history, that's enough novelty.
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Old Aug 17th 2021, 2:52 am
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Default Re: Ownership of Property - how would it affect me?

Originally Posted by dogstar
HGerchikov Very informative post above and I may I ask if owning a home means that one spouse or more has their name on the deeds/mortgage? In my case our property in the UK is in my name although wife has obviously lived here since our marriage. Can we use this technicality to better our chances in Canada for not having to pay land transfer tax and claim a rebate? I am suspecting not but ask the question seeing as you have local knowledge?

Many Thanks
In terms of the Land Transfer Tax rebate. If either of you owned a home during the time you were married it is irrelevant which of you was named on the deed, you do not qualify for the rebate.

Relevant bit from legislation:
To claim a refund, you must be at least 18 years of age, you cannot have owned a home or an interest in a home anywhere in the world, and your spouse cannot have owned a home or interest in a home, anywhere in the world while he or she was your spouse. Previous ownership in a home means you do not qualify for the land transfer tax first-time homebuyers refund. The method of acquiring the home (e.g., purchase, gift or through an inheritance) is not relevant.
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Old Aug 17th 2021, 3:01 am
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Default Re: Ownership of Property - how would it affect me?

Originally Posted by dbd33
I am not now, nor have I ever been, HGerchikov but I don't think this works:

1. Not being named on the deed isn't quite the same as not owning. In the event of a domestic split, the unnamed spouse still has a claim on half the house. Whether or not that counts as "owning" in the specific context of the Canadian government's interpretation of UK domestic law is not a hair I would want to split with that government.

2. In order for the spouse who was unnamed in the UK to count as a first time buyer in Canada, that spouse would have to be the only name on the deeds of the first house in Canada. If the income of the other spouse is needed to qualify for a mortgage the bank isn't going to go for that arrangement.

Generally, in dealing with the tax department and with banks, I think it sensible not to be unusual in any way. Don't be interesting. You don't want to meet the tax auditor or the bank's committee for consideration of extraordinary proposals, you want to be approved blandly. Already you're an immigrant with no local credit history, that's enough novelty.
The legislation prevents Point 2 from being an option - see above post.
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Old Aug 17th 2021, 5:48 am
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Default Re: Ownership of Property - how would it affect me?

Originally Posted by dbd33
I am not now, nor have I ever been, HGerchikov but I don't think this works:

1. Not being named on the deed isn't quite the same as not owning. In the event of a domestic split, the unnamed spouse still has a claim on half the house. Whether or not that counts as "owning" in the specific context of the Canadian government's interpretation of UK domestic law is not a hair I would want to split with that government.

2. In order for the spouse who was unnamed in the UK to count as a first time buyer in Canada, that spouse would have to be the only name on the deeds of the first house in Canada. If the income of the other spouse is needed to qualify for a mortgage the bank isn't going to go for that arrangement.

Generally, in dealing with the tax department and with banks, I think it sensible not to be unusual in any way. Don't be interesting. You don't want to meet the tax auditor or the bank's committee for consideration of extraordinary proposals, you want to be approved blandly. Already you're an immigrant with no local credit history, that's enough novelty.
HGerchikov ;-) Thanks
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Old Aug 17th 2021, 5:50 am
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Default Re: Ownership of Property - how would it affect me?

Originally Posted by HGerchikov
In terms of the Land Transfer Tax rebate. If either of you owned a home during the time you were married it is irrelevant which of you was named on the deed, you do not qualify for the rebate.

Relevant bit from legislation:
To claim a refund, you must be at least 18 years of age, you cannot have owned a home or an interest in a home anywhere in the world, and your spouse cannot have owned a home or interest in a home, anywhere in the world while he or she was your spouse. Previous ownership in a home means you do not qualify for the land transfer tax first-time homebuyers refund. The method of acquiring the home (e.g., purchase, gift or through an inheritance) is not relevant.
Thanks HGerchikov I had a feeling it would not work in our favour:-(
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