I always knew I wanted to go to University of Waterloo, despite my parents don’t really know much about it at the time.

My dad lives in Hong Kong. All he had heard of was University of Toronto.

I always lived off campus, except my master year, sharing either a townhouse or an apartment with multiple roommates.

At the time, single detached houses in the neighborhood were going for about $200K. Some of the houses in the neighborhood fit in about 10 to 12 people per house.

Each room was charged anywhere between $350 to $500 per room.

It is pretty lucrative return just based on those numbers.

We are also in the student rental market in St Catharines. Giving this return and the low housing prices in St Catharines, many parents choose to buy a house for their kids who go to post secondary schools there than renting.

More often than not, these kids are able to live rent free. At the end of the five years or so, the parents can sell the house at a profit.

Many investors wonder what the best ownership structure would be to minimize the amount of tax they would have to pay from these properties.

Some of them are creative enough to ask if it is worthwhile to put the properties in their adult children’s names who are attending post secondary schools, citing that they have lower tax bracket.

Here are a few points to consider putting the student rental in your adult children’s name while they attend school.

  1. Use of first time home buyer tax credit When a taxpayer purchases a home that they occupy for the first time, they are eligible to claim the first time home buyers’ amount.This is a non-refundable tax credit of $5,000, which can be used to lower your tax by $750.This means that, if you purchase a rental property in your adult children’s name while they are still in post-secondary school, chances are, they won’t be able to utilize this tax credit.Unless they are enrolled in a coop program earning a decent amount of salary or they would have to work part time while in school, it’s unlikely that they will get to use this credit.

    If the adult child does not even live in the house, he isn’t qualified to claim the tax credit.

  1. Reduction of land transfer taxIn Ontario, when you purchase a new property that you move in for the first time ever in the world, you are eligible to claim a land transfer tax rebate up to a maximum of $2K.If an investor chooses to purchase the student rental in their child’s name, they would get a reduction of maximum of $2K against the land transfer tax bill, provided that the adult child is moving into the property.But on the flip side, this also means that in the future, this adult child will no longer be able to get the benefit when he buys his first property.
  1. Claiming the house as principal residence upon saleIf the adult child lives in the property and it is principally used as his home, he can qualify to claim the principal residence exemption upon sale.This means that all the capital gain potentially made throughout the year of ownership could potentially be tax exempt, provided the house is largely used for his residence instead of rental. (Please see my previous blog post regarding principal residence exemption.)
  1. Lose of RRSP Home Buyer PlanYou are allowed to borrow against your Registered Retirement Savings Plans when you purchase your first property.And you can repay it subsequently in equal installment over 10 years time.Your adult child will likely not able to take advantage of this benefit.
  1. Difficulty in borrowing moneyMore likely than not, your child does not have any financial history on his tax return.It’s probably not possible that the bank would agree to loan him money.As a minimum, you may still be on the hook to co-sign for the mortgage.
  2. What if you want to hold the property long term?If you would like to hold the property long-term, your adult child can be earning much more income down the road.He would still be responsible to report all the rental income and any cumulative capital gain from the time he moves out to the time the actual sale happens.

Until next time, happy Canadian Real Estate Investing

Cherry Chan, CPA, CA

Your Real Estate Accountant

6 replies
  1. Ashish shah
    Ashish shah says:

    Home buyer Rrsp withdrawal has to be repaid in 15 years not in 10 years if I’m not wrong.

    • Cherry
      Cherry says:

      You are right! My bad. Let me update my blog for this.

  2. Morgan yyc
    Morgan yyc says:

    Student housing should be made much more affordable as there are so many students who try to make ends meet every month. We need to make the process stress free for them.

  3. scotty
    scotty says:

    Hi – great web page and lots of great and interesting information. Can you conform the noted 2 items below .
    first time ever in the world purchasers, you are eligible to claim a land transfer tax rebate up to a maximum of $2K? ( is this current information -2021)
    If an investor chooses to purchase the student rental in their child’s name, they would get a reduction of maximum of $2K against the land transfer tax bill, provided that the adult child is moving into the property.( does this apply to our rules today 2021)

    Thank you , Scotty

  4. Marika
    Marika says:

    Hi Cherry,

    Great article. I have a situation and was hoping you could offer some advice.
    My boyfriend and I rent in Toronto, but haven’t been able to save up a down payment to buy a home. We also don’t make a lot of money and don’t have the best credit.
    My parents have a house in Kitchener and they’re retired. They don’t spend a lot of time in the country, but my dad isn’t quite ready to sell his house yet. He’s attached and comfortable there.
    We had originally discussed selling their home and purchasing something smaller in Toronto where my boyfriend and I could live and they could stay with us when they’re here. Since my dad isn’t keen on selling right now, we’ve thought about the possibility of borrowing against their home to purchase an “investment property” where my boyfriend and I would be the tenants. Do you have any information you could offer about that type of situation and where would we start if we wanted to try going this route?

    Thank you,



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