I have clients who are on their daughter’s property as a 1% owner [Joint tenant]
Would love to know how others deal with two parents as Joint Tenants owing 1% and the child owning 99% as Tenants in Common.
Should I file one return for both parents or two returns for each parent?
My understanding is there are 2 UHT returns here for 2022 and likely none for 2023.
If mom and dads title is joint tenancy for the 1%, but the remaining 99% for the kid is tenants in common with mom and dad (as joint tenants), you may not even have a UHT return. Tenants in common generally means mom and dad actually own 1% of the property, but its likely mom and dad each hold their undivided interest of 1% in trust for kid.
My understanding is that if there is no written trust agreement, you do not have a trust when land is involved unless a judge says you do. But they would actually have to be entitled to 1%of the sale proceeds and report 1% of any rental income, which is likely not the case.
Its likely purely for financing and mom and dad are not expecting 1% of the property interest, so likely 2 UHTs for 2022 only.
I agree on the two UHT returns. Since this is only for financing purposes [they are coming of title in June of this year because the daughter now qualifies] if I would say it is NOT a trust, then 1% has to be reported as a deemed disposition by the parents which is not eligible for the principal residence deduction. But that doesn’t seem right to me. It is clearly only for financing so I think that does create a bare trust.
I think CRA would disagree that if there is no written trust agreement that there is no trust. They have given guidance what to do in the case of a bare trust if there is no written trust agreement.