When Kurt purchased a condo, his father co-signed for the mortgage. Now that he wants to sell the condo and his dad is on the title, he wants to know who will be subject to the capital gains tax? The answer is that regardless of who is the named owner of a piece of property, the person subject to a capital gain tax will be the beneficial owner of the property. The beneficial owner is considered to be the person who maintains possession of the property along with it’s use and risk, often evidenced by things such as maintaining insurance on the property or any entitlement to income.

Key Takeaways:

• For tax purposes, capital gains are reported on the tax return of the beneficial owner of the property.
• In Interpretation Bulletin 170R, the CRA describes beneficial ownership as having possession, use and risk as its primary attributes.
• In this case, the beneficial owner is Kurt and not the co-signer.

“Figuring out who “owns” a property is key.”

Read more: When two people are on the title to a condo, who pays capital gains?