QUESTION # 29
Two brothers are registered as joint-tenant owners of a piece of real estate. Assume each brother has a 50 percent interest in such real estate. They wish to convert the joint-tenancy arrangement to tenants-in-common, with each having a 50 percent undivided interest. Is the conversion a taxable transaction to either or both brothers? (Note - the Department of Finance has advised that they co not consider proposed subsection 248(21) contained in Bill C-18 to apply to this situation.)
RESPONSE
In our opinion, the conversion from a joint-tenancy arrangement to a tenancy- in-common, whereby on death each brother will have his interest pass to his estate rather than to the survivor of the two, will not be considered a disposition provided that, immediately after the conversion, each co-tenant retains his 50 percent undivided interest in the property.
B.C. Institute of Chartered Accountants - Liaison MeetingVancouver DONovember 1991Claude TremblaySection 23