Refinancing and Capital Gains - Canada

[Zach Denny]

Hi All,

Looking for some input on refinancing and capital gains in Canada.

Situation:

I'm currently purchasing our first house hack, moving into the suite and renting out the larger unit (in PEI). It's not currently rented, meaning the bank wouldn't accept the potential rent as income, so we had to have family member be a cosigner. We were just approved for financing, but a condition is that the cosigner must be on both the mortgage and the property title.

Our intent is to only keep them on for a few years, then refinance and remove them from title and loan. As I understand it, with their name on the title, if we refinance in 5 years and remove them from the title, they would need to claim any capital gains on their taxes that year (correct me if I'm wrong, that's what I've gathered from CRA). I'd like to avoid this if possible, as they are just co-signing to help us out, not as a partner, not getting any of the rental income or tax deductions of having the rental.

Wondering if there are any creative ways to get around having your cosigner pay capital gains when we refinance to remove them. Trying to inconvenience our co-signer as little as possible.

Thank you!