Rising prices of real estate have made the dream of homeownership more challenging than ever for the younger generation. In these conditions, prospective buyers often need to get creative to find a way into the market.

Some are fortunate enough to have family members who are in a financial position to help. The question of today is, can you gift a house to your child in Ontario? It may seem reasonable that your property is yours to do with as you please. If you’re downsizing, handing over the keys can be a logical way to keep your home in the family.

However, nothing is ever simple when it comes to real estate. Today, we’ll outline some of the ways you can transfer a property title to a family member.

Disclaimer: Please note that this post is for information purposes only, and there can be numerous legalities when transferring property, even without money changing hands. We always recommend consulting an attorney for legal advice. 

Before we continue, have you downloaded our free Selling Tips E-Book yet? It is full of advice to streamline your transaction in any market. 

Tax Implications of Gifting Real Estate

Giving a loved one a home to live in is unlike any other gift. It’s more complex than transferring ownership of other assets, such as a car, where all you need to do is visit a service centre and sign the appropriate documents.

When ownership of real estate changes hands, the Canadian government always treats it as a transaction. In the case of a true gift with no strings attached, the selling price would be $0, but there could still be tax implications. To start with, there’s a difference between gifting a property you own free and clear and one with a mortgage.

If there’s a mortgage, provincial land transfer tax will apply to the remaining balance being assumed. Capital gains are another significant point for many homeowners.

When you only own one home, and are gifting your primary residence to a family member who also does not already own property, the principal residence exemption will likely cover you both. If multiple properties are involved, it’s a different story. In this case, there will be capital gains based on the fair market value of the house.

Do you plan to sell your home instead of gifting it? The posts below are full of valuable tips and insight:

Implications of the “$1” Loophole

Contrary to popular belief, selling the house to your child for $1 or another nominal amount does not necessarily help and can do financial harm later on. First of all, you, as the owner, are still taxed as though you sold it at full value.

That is only the beginning. Here’s another consideration: capital gains are calculated based on how much a property increases in value over and above the purchase price. For example, if you buy a rental house at $500,000 and it is later worth $900,000, you have a gain of $400,000. Under current guidelines, 50% of the gain is taxable.

However, if you let your child “buy” your house for $1 and they later sell it, their “purchase price” is recorded as $1. If they sell it for $900,000, the government taxes them as though they have a gain of $899,999. 

The primary residence exemption may or may not protect them at this point. If they ever own a second property, even for a short time, they could end up with a severe tax penalty. Before selling a home at a nominal amount, be sure you – and your child – understand all possible scenarios. Otherwise, your generous and well-intentioned gift could turn into a serious financial burden.

The Transfer of Property Through Estate Planning

One of the more common methods to transfer property from parent to child is through inheritance. In general, you can name your child as a beneficiary in your Will. Upon your passing, they will inherit your belongings as per your written instructions.

This path can have complications as probate must be complete before anything is fully settled. This process takes time and can be expensive. In Ontario, probate fees (Estate Administration Tax) are $0 on the first $50,000 and approximately 1.5% on the value of the estate above that. Fortunately, effective planning can help you avoid the worst of it.

For example, you could put your child on title with you before your passing. There are two ways to do this:

Types of Homeownership

Joint Tenant: The normal arrangement between spouses, a joint tenancy means all owners have equal right to possess and own a property. When one owner dies, the other automatically inherits their share, and no probate period is required. 

This strategy may seem relatively straightforward, but it’s important to understand all implications and risks. Your child now has legal ownership and can make decisions, which may not be authority you want them to have just yet.  

A way around this could be to set up a “Bare Trust” for inheritance purposes, where they “own” the house on paper, but do not have any decision-making power. This too can have tax implications, even when no payment for the property is involved. Starting in 2026, homeowners who choose this path must submit the appropriate forms on their yearly return. 

One of the biggest risks of joint tenancy or bare trusts is in the event your child faces financial difficulty or goes through a divorce. Since they are on title, the courts could consider your home part of their assets, which could get divided up between creditors and the ex-spouse. 

Tenants in Common: Each owner retains separate shares, which do not have to be equal. The advantage of tenants in common is that you can limit your child’s ownership in the property. 

You could own 70% while they have the other 30%, as an example. However, it doesn’t entirely solve the probate issue. 

When one owner dies, the other does not automatically inherit. In this case, your child keeps their share of the property, but yours goes through probate before being passed down to your beneficiary.

Thinking about buying a home in a peaceful, picturesque community? The posts below will give you food for thought:

Gifting the Down Payment

You don’t necessarily have to give your child an entire house. Another way is to simply gift the down payment. This makes it easier for them to obtain financing and lowers their monthly payments. 

The funds must be a true gift and not a loan. To that effect, many lenders will require a signed “gift letter” confirming the money does not need to be paid back before finalizing the mortgage.

There are always advantages and implications, regardless of how you wish to help your child into the market. By consulting a knowledgeable attorney and an experienced real estate agent, you can make sure both you and they are protected. Professional guidance will help ensure peace of mind so your child can enjoy your generous gift in whatever form it takes. 

Whether buying or selling your home, our Georgetown real estate agents can help. Give us a call directly at 905-873-9944, email us at info@lisahartsink.com or fill out the form on this page to get in touch!