Can you get a mortgage with Canada Revenue Agency debt?
My husband owes CRA about $40,000 since he got audited a couple of years ago. We are paying if off, $1000 a month. We can get a mortgage just on my income but it won't be more than $300,000 unless we use both of our incomes in which case we could get a way higher mortgage. But the problem is, he has that tax debt. So I doubt that any bank will consider his income for a mortgage? Does anybody know for sure?
@bw022 - Thanks for your detailed response which pretty much answers my question. Just FYI though, I have already been approved for a mortgage. My husband has an agreement with CRA to pay $1000 a month, most months he pays more. They have never touched my account or tax returns because of that agreement with him. So if I got a mortgage, we can pay that off instead of rent and still make our monthly payments to CRA. That was kind of the plan...we'll crunch some numbers and see how it goes...thanks again.
- bw022Lv 77 years agoFavorite Answer
Nope. Nor can you.
First, Canada Revenue Agency has near absolute ability to collect on a debts and receives preferential payments over almost all other debts in collections and bankruptcy. The moment you buy a house, CRA can put a lien on it, force you to sell it, get their money, and the bank ends up $40,000 (or more) in the hole.
Second, the bank will always want to see his notice of assessment and run credit checks on him -- whether his name is on the mortgage or even the title. Any property or debt either of you gained since you are married is common property.
Third, no bank is going to think you are financially responsible if you are borrowing money when Canada Revenue Agency is charging you 2% per month interest. That $40,000 will be over $50,000 at the end of the year and nearly $80,000 in three years -- if CRA doesn't garnish wages, put a lien on the house, put you in jail, etc. At $1000 a month it would take seven years to pay off the debt and cost you over $40,000 in interest alone. Your credit rating will be dirt during that time -- and for years afterwards. That is bordering on insane.
Forth, you need to put down 5% minimum as a down payment and most banks will want to see 10%. That is $15k to $30k minimum. In order to get CRA to agree to a multi-year payback plan you would to have needed to proof that you didn't have the ability to pay it back. The moment CRA sees that you purchased a home... the collections officer at CRA is going to know he was lied to about your inability to pay back the debt. Obviously you have at least $15k just lying around.
Neither you nor your husband are getting a mortgage until you get CRA fully paid off -- and likely several years after that. Further, if you have the money for a down payment, you are absolutely nuts not to pay CRA off immediately. They charge massive interest, have near unlimited collection ability, ruin your credit rating, and can put people in jail for not paying. And remember that in Canada, anything you purchase or do since you were married is joint property -- than includes your income.
- 6 years ago
First, Canada and the united states Earnings Company has near overall ability to collect on a bad debts and gets preferential costs over almost all other bad debts in choices and bankruptcy. When you buy a home, cra can put a loan on it, energy you to provide it, get their money, and the lending company completes up $40,000 in the gap.Source(s): http://www.syndicatemortgages.com/
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