Canadian Tax Advice: to put my name on the house title, or not?

[lifejoy]

My parents are trying to decide if and when to put my name on their house title. The goal is to avoid capital gains tax but also probate fees. My parents will probably be around another 20-35 years. They like to plan, and they don't want to give money away to the tax man.

Any advice?

[Shinplaster]

I can't remember if you currently own a home, or have owned one in the past.  If you haven't, wouldn't adding you to their title disqualify you from taking advantage of first time homeowners credits in the future?  Also, if they sell and downsize, it could cost you money.  If you own your own home, your share in their home could be taxable since it is not your primary residence.  Your marriage sounds pretty solid right now, but IF you and DH were ever to split up, he could be entitled to half your share of their house.  Have they thought of that?   

Hopefully one of the Canadian tax experts weighs in.  Have you thought of asking on the Canadian tax question thread?   http://forum.mrmoneymustache.com/taxes/can'eh'dian-tax-you-have-questions-i-have-answers/

[lifejoy]

I can't remember if you currently own a home, or have owned one in the past.  If you haven't, wouldn't adding you to their title disqualify you from taking advantage of first time homeowners credits in the future?  Also, if they sell and downsize, it could cost you money.  If you own your own home, your share in their home could be taxable since it is not your primary residence.  Your marriage sounds pretty solid right now, but IF you and DH were ever to split up, he could be entitled to half your share of their house.  Have they thought of that?   

Hopefully one of the Canadian tax experts weighs in.  Have you thought of asking on the Canadian tax question thread?   http://forum.mrmoneymustache.com/taxes/can'eh'dian-tax-you-have-questions-i-have-answers/

I have not yet owned a home. All good points and things worth looking into!! Thank you for giving me some direction :)
Much appreciated.

[lifejoy]

Others will have better advice for your situation, but I read this article in G&M recently, which discusses holding assets jointly:
http://www.theglobeandmail.com/globe-investor/retirement/retire-family/estate-planning-where-raw-emotion-meets-dry-calculation/article33658442/

From the middle of the article:
...But what if a parent, say, an aging widow or widower, decides they’d like to hold the home or other assets jointly with a grown child, not only to save fees, but also for convenience?

“Sometimes people think it might be a good idea to hold assets jointly with a child, to make things run more smoothly. They are often misinformed of the risks and the problems with this,” said estate planning lawyer Tanya Murray, estate planning lawyer at Pawson Law in Vancouver.

So helpful to have a BC lawyer weigh in! Thanks for the article!

[Goldielocks]

A few thoughts.

1) Capital gains are zero if this is your parent's primary residence (Canada)

2) Probate is not that expensive in most provinces.  Three provinces have probate fee of $14 per $1k over a set limit, the others are lower at $4 to $7/ $1k (And NWT and Alberta have a flat $400, etc).. Which province are you?

3)  Probate is on the equity value of the home, minus the mortgage on it, so getting a mortgage and investing that amount, (life insurance is a classic option sold to seniors for this), or have a way to not pull from RRSPs / RRIFs other than the minimum, and spend the house equity instead... leaving you as the beneficiary to the RRIFs / RRSPs, etc.

[lifejoy]

A few thoughts.

1) Capital gains are zero if this is your parent's primary residence (Canada)

2) Probate is not that expensive in most provinces.  Three provinces have probate fee of $14 per $1k over a set limit, the others are lower at $4 to $7/ $1k (And NWT and Alberta have a flat $400, etc).. Which province are you?

3)  Probate is on the equity value of the home, minus the mortgage on it, so getting a mortgage and investing that amount, (life insurance is a classic option sold to seniors for this), or have a way to not pull from RRSPs / RRIFs other than the minimum, and spend the house equity instead... leaving you as the beneficiary to the RRIFs / RRSPs, etc.

My parents live in BC and I will too, very soon! It is their primary residence. We're not worried about capital gains for them, just for me if my name were on the title.

My parents are FIRED mustachians, so there is no mortgage on the home.

Interesting thought about spending the house equity. I don't think my parents would go for that, purely because mentally/emotionally they love not having a mortgage.