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Mortgage  Question?
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Transfer mortgage home Canada sale from tax standpoint?

If I transfer the mortgage on a house I own in Canada can I sign and notarize the agreement in California or do I physically have to be in Canada? Is this transfer considered a sale from a tax standpoint?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

Canadian law applies to the transfer of a mortgage on a property located in Canada. Based on my experience, Canadian notary publics are recognized in the U.S. While reciprocity typically applies to these situations (which means a California notary public would be recognized in Canada), I recommend that you contact a Canadian title company or real estate attorney to confirm this point. If Canada does not recognize a California notary public then you would likely have to physically be in Toronto to sign the documents that affect the mortgage transfer. Please note that transferring a mortgage from one party to another typically requires lender approval. If the lender approves the transfer of the mortgage then you can transfer ownership of the property using a quit claim or grant deed.

On your second question, a transfer of property ownership from one party to another is generally recognized as a sale. Factors such as the amount of equity you have in the property and your tax basis as compared to the fair market value of the property are also key considerations. Typically, if no equity is gained in a property transfer then there is no tax event, but if equity is gained as a result of the transfer then it could be deemed a taxable event, depending on the considerations I outline above. Finally, you may be dealing with multiple jurisdictions and tax codes (Canada and the U.S.) which impacts how the transfer is treated from a tax standpoint. We are not attorneys and do not provide legal advice so we recommend that you consult a real estate attorney or accountant to determine the tax ramifications of transferring the mortgage.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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