I want to sell 50% of a duplex I own to my Dad. Is this possible?

Question

I own a duplex that has significantly increased in value over the last two years. I would like to extract some of that increased value so that I can purchase another property. I'm looking at selling half of the ownership of the home to my Dad. Is this hard to do? Will my mortgage company give me a hard time?

I live in Canada.

Luc Boiron · Answer

@Mitchell P. It might not be a problem if you gift him half, but Land Transfer Tax would be in play if he pays, assuming this is in Ontario. You'll also have the cost of registering the transfer and the new or modified mortgage by a lawyer.

Roy N. · Answer

Mitchell:

Whether you can sell (easily) half the interest is going to depend a couple things:

• is the duplex registered as a single structure on a single property number with a single tax account, or does each half have a separate parcel and tax account?
• do you own the entire building?

If you own the entire building, you could sell a 50% interest to your father (as a tenant in common), but you would trip the due on sale clause of your mortgage and the lender may accelerate repayment of the note.

Since the building has appreciated, you will also be looking at a taxable event and will owe capital gains on the sale and, potentially, a CCA recapture.

It might be best to review with your accountant before pursuing this plan.

Jeff B. · Answer

Getting a contribution from Dad is one thing, but giving or adding dad to the title is a separate (but taxable) issue.

What happens at home is not always reflected in the transaction.

Mitchell P. · Answer

No, you are correct it is not classified as a Duplex. I mis-spoke in my original post.

My Dad is not a guarantor. I ended up getting the mortgage by myself.

I will take a look at what disposition entails.

Roy N. · Answer

@Mitchell P.

If it is a bungalow with an accessory apartment is it even classified as a duplex?  What does it say in the land registry?

A question I forgot to ask above:  Is your Dad by any chance a guarantor on the mortgage note?

You could "gift" half to your father, but there will still be a disposition.

Mitchell P. · Answer

Thanks for the reply Roy! I own the entire house. It is just a single structure. It's a bungalow with an in-law suite in the basement.

I will call my mortgage company and see what they say. To me it seems like it would be better for them to have 2 people on the mortgage (more income protection etc.), but I guess I need to see if they feel that way! lol

Could I just give my Dad half of this house without money transferring hands?