Hi Guys,

I have question related to rental property.

I am in process of buying rental property. My wife is in lower tax bracket and I am on higher tax bracket.

I am thinking to keep my wife share 90% and my share 10%. So, I have to pay less income tax on yearly income as well as capital gain when selling the home.

Is this valid for married couple from CRA point of view? OR Married couple must have to claim income 50/50.

What is the legal way to achieve 90/10 share between married couple? I like to know the legal process for real estate transaction and want to stay away from CRA audit when my wife declares 90% income on her tax return.

1) During the real estate transaction, should I mention "joint tenancy" or "Tenants in common"? I know the difference but what should I mention to take tax advantage as described above?

2) Is it necessary that 90% of down payment should come from my wife's account and 10% from mine? We have all joint accounts because I do banking on behalf of my wife though our salary goes in different accounts. She has some savings too.

Any one has an experience dealing with this kind situation?
Any tax expert?

I appreciate quick response.

Thanks in Advance.

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Success is Never Ending and Failure is Never Final.

Generally they want you to split it 50-50. BUT if you have a GOOD Accountant, see if you can loan your spouse the money at 1% to her at the Reserve Bank Rate for the whole duration and lock it up. Then do what best you want to do with it. It is my suggestion.

Good Luck.

FH.

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Originally posted by meitsme

Hi Guys,

I have question related to rental property.

I am in process of buying rental property. My wife is in lower tax bracket and I am on higher tax bracket.

I am thinking to keep my wife share 90% and my share 10%. So, I have to pay less income tax on yearly income as well as capital gain when selling the home.

Is this valid for married couple from CRA point of view? OR Married couple must have to claim income 50/50.

What is the legal way to achieve 90/10 share between married couple? I like to know the legal process for real estate transaction and want to stay away from CRA audit when my wife declares 90% income on her tax return.

1) During the real estate transaction, should I mention "joint tenancy" or "Tenants in common"? I know the difference but what should I mention to take tax advantage as described above?

2) Is it necessary that 90% of down payment should come from my wife's account and 10% from mine? We have all joint accounts because I do banking on behalf of my wife though our salary goes in different accounts. She has some savings too.

Any one has an experience dealing with this kind situation?
Any tax expert?

I appreciate quick response.

Thanks in Advance.

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1) Tenancy in common will be the type of ownership in this case . Joint tenancy comes to play only when there is equal interest of both the parties.

2) Not necessary. mortgage can be paid 100% by any party. Prefer not to split it for easy accounting.

I am not sure tax bracket matters in this case (when spouse in partnership). The income gets added to the total family income and then get taxed. Also capital gain is not calculated or impacted by the sellers tax bracket. it is based on the difference between total proceeds and adjusted cost of property.
Best will be to go to tax accountant and ask this question. Do not forget ot file taxes through an accountant only in your year of buying property for proper declarations.

Thanks for quick response.

I know CRA prefers 50/50 and we both have to declare income 50/50 in tax return and capital gain too.

I would like to go for 90/10 to save taxes. I need legal advice to avoid CRA audit because I am looking for 90% share for my wife who is in lower tax bracket.

What is the best way and how to process complete transaction from start?

I will take advice from accountant but I like to know more from someone here who has an experience or knowledge on taxes for rental property.

Thanks.

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Success is Never Ending and Failure is Never Final.