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How is a purchase of a Pre-con condo treated as asset deduction at time of marriage?

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  • How is a purchase of a Pre-con condo treated as asset deduction at time of marriage?

    In a scenario where a per-construction condo property was purchased in Ontario, Canada by one spouse (with a signed Agreement and Purchase and Sale) prior to marriage and owned on Marriage date, would only the deposits of the total purchase price (approx. 15-20%) be considered OR if a professional appraisal was done on the property and it appraised at or near the contracts stated full purchase price be considered? Additional Facts: The condo was under development on marriage date. The condo was held throughout marriage up until separation date. There was no title/ownership on marriage date because it was pre-con, however, it was only later in the marriage when title/ownership was given.

    Basically, what could potentially be considered in terms of deduction of asset at time of marriage: only the deposits that were paid, or could the full appraised value done by a professional appraiser (at the time of marriage date) be considered? Another point to add was that on marriage date, this property could potentially have been sold through an assignment contract at or near full appraised value. Would the courts consider full appraised value or only the deposits made?​

    Please advise. Thanks in advance!

  • #2
    It's a big enough risk that I would ask a lawyer.

    Either way you'll need 2 reports from a professional appraiser for dom and dos. They're looking for your worth; so if you sold on dom, you would have little equity gain.

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    • #3
      Originally posted by StillPaying View Post
      It's a big enough risk that I would ask a lawyer.

      Either way you'll need 2 reports from a professional appraiser for dom and dos. They're looking for your worth; so if you sold on dom, you would have little equity gain.
      Agreed.

      Will also add what could have happened is not relevant. You had a piece of property when you married and you sold it at some point. The asset is a fixed state on both those dates and is considered as such.

      Remember too that anything owing on it like a mortgage reduces the value as well.

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      • #4
        So in summary, it make sense to include the full appraised value done by a professional appraiser ​at the DOM for a Pre-construction property as it was still under construction during the DOM hence no mortgage/liability on it.

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        • #5
          I have to disagree. If you bought a condo pre-con, you haven't actually bought an asset. You bought the right to purchase a specific part of a building, when it is complete. Trying to value that, at a price other than the sum of the deposits you paid, would not be possible.

          The best proof of this is when you are given the right to move in, but the building isn't registered, and you need to pay rent to the builder. You don't own the condo until the building is registered.

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          • #6
            Pre-construction condo flipping is a thing so there's definitely a value involved. This could take years, so dependent on market, etc, you'll definitely get your deposit value but there should be a profit involved. Pay the appraisal and hope for the highest value. Since both are on title, the 2nd appraisal would be for current value; not dos.

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            • #7
              The value would be the deposit, plus the 'gain' the property might have enjoyed if you sold it on assignment. You would not get to deduct the entire value of the condo unless you put 100% down.

              For example, let's say you bought a pre-con condo which has a full price value of $800,000.00. You put down 20%, or $160,000.00. On the date of marriage, the condo was now worth $900,000.00, even though you don't yet own it. Your date of marriage deduction would be $260,000.00 ($160K for the deposit, $100K for the appreciation). Giving one $800,000 of value for a $160,000 price tag would be silly.

              Although there is no mortgage until you take possession, you still have to pay the balance owing on the purchase price. That is an outstanding liability that must be factored into the calculations.
              Last edited by Kinso; 04-08-2023, 08:00 PM.

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              • #8
                Originally posted by Kinso View Post
                The value would be the deposit, plus the 'gain' the property might have enjoyed if you sold it on assignment. You would not get to deduct the entire value of the condo unless you put 100% down.
                How would you calculate what the assignment value is for it? You would need to look at what was available at the time - since the property wasn't registered, there would be no comps available for the appraiser to base it on. Plus, it would also be based on what existing inventory was still available for sale by the builder, as well as any other assignments that were on the market at the time.

                Plus you also have the issue if the unit features changed between what was listed on the assignment vs what was actually built - when does the change in value occur? Before or after the DoM?

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                • #9
                  You get the opinion of an expert in assignment sales who could give a number.

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