Should You Add Your Child to the Title of Your Home in Ontario?

The short answer: Adding your child to your home's title as a joint tenant can pass the home outside your estate and avoid Estate Administration Tax, but we advise against it. The risks include your child's financial problems, sibling conflict, needing their permission to sell or refinance, and capital gains tax that can outweigh the probate savings.

We always answer this with "no."

We understand why you might think it's a good idea, though. A joint tenancy with your child can be a simple way to transfer ownership of your property directly to them after you die, without having to go through probate.

Can you avoid Estate Administration Tax by adding your child to the title?

Technically, yes. But there are situations where avoiding Estate Administration Tax (EAT) costs you more in the long run.

When your child is listed as a joint tenant, it's likely that the home won't be their principal residence. That can create income tax complications, like capital gains. Adding your child to title may also affect their eligibility for Ontario's first-time home buyer land transfer tax refund on a home they purchase.

Why shouldn't you add your child to the title of your home?

There are several reasons we advise against it:

• Financial problems. Your child's or their spouse's financial difficulties, a divorce, or a lawsuit could put your home at risk.
• Sibling conflict. If only one child is named on title, disputes among your children can follow.
• Loss of control. If you ever want to refinance or sell your home, you'll need your child's permission.
• Tax implications, such as capital gains.
• Questions about your intentions. Without clear documentation, others may later argue about whether your child was meant to own the home or just hold it for you.

What does this look like in real life?

A CBC News article gives an example of a family whose effort to avoid probate tax didn't turn out as intended. It's a British Columbia example from 2019, so the exact figures differ in Ontario, but the lesson applies.

In the example:

• A daughter was registered on title to her mother's $500,000 home in 2011.
• In 2019, the mother passed away and the home sold for $1 million.
• The daughter already owned her own home, so her half of the home's growth in value was subject to capital gains tax, a bill of roughly $63,000.
• The family avoided about $14,000 of probate tax, or slightly less than 1.4 per cent of the home's value.
• Had the daughter not been on title, the estate would have paid the probate tax, but the sale proceeds would have arrived tax free. The family would have been better off by about $49,000.

For comparison, Ontario's Estate Administration Tax on a $1 million estate would be about $14,250: no tax on the first $50,000, plus $15 per $1,000 above that.

What are less risky ways to reduce Estate Administration Tax?

Adding your child to your title might help your estate avoid paying some tax, but it's a risky choice. There may be less risky ways to pay less Estate Administration Tax:

1. Write a will with a trusted estate planning lawyer. It won't necessarily reduce EAT, but it simplifies probate for your loved ones.
2. Name beneficiaries on your registered accounts. Assets with a designated beneficiary aren't part of your estate and aren't subject to EAT.
3. Speak with a lawyer about your specific situation before changing how you hold your home.

Learn more in our post on Estate Administration Tax in Ontario.

Frequently asked questions

Can I add my child to the title of my home?
You can, but we advise against it. It can expose your home to your child's financial problems, create conflict among siblings, and trigger capital gains tax.

Does adding my child to my title avoid Estate Administration Tax?
Technically, yes, because the home can pass outside your estate. But the tax cost can be greater than the probate savings.

Will my child owe capital gains tax if they're on title?
Possibly. If the home isn't your child's principal residence, capital gains tax can apply to their share of the home's growth in value.

Do I need my child's permission to sell if they're on title?
Yes. If your child is a joint owner, you'll need their permission to refinance or sell your home.

What's a safer way to reduce probate fees?
Write a will, name beneficiaries on your registered accounts, and get personalized advice from an estate planning lawyer.

How much is Estate Administration Tax in Ontario?
There's no tax on the first $50,000 of an estate, and $15 per $1,000 above that.

Contact

Brian McMurter is a real estate and estate planning lawyer at McMurter & Associates in Whitby, helping Durham Region, Ontario residents with estate planning and real estate law. 

Contact McMurter & Associates Monday to Friday, 9 a.m. to 5 p.m. at info@mcmurter.com or call 1 800 756 7138 or 905 666 9200 to schedule a consultation.

Disclaimer: This article provides general information about Ontario law and is not a substitute for legal advice. Please speak with a lawyer about your specific circumstances before making decisions about real estate law and estate planning.