One of my client is selling his primary residence to his Own Corporation. Are there any requirements which needs to be followed & completed before the closure of this transaction?
Here is the detail
1- Primary residence was on Rent for 1 year out of the total of 6 years.
2- Market price at the time of Renting the property was 1.5 Million and now at the time of this transaction it has reduced to 1.3 Million (Capital loss of 0.3 Million)
Kindly share your experience. Thanks and appreciated.
I suspect the biggest issue will be proving the FMV. Your client should obtain legitimate appraisals as of both dates, and be ready provide those documents to CRA when requested. Also, if it isn’t obvious, your client should ensure the sale is handled by a lawyer, to produce an appropriate legal agreement (which CRA will also likely ask for).
Not sure if Section 85 can be used in this case, but if so, the details should be properly documented, and referenced in the sale agreement.
Why does he want to sell his house to his corp?