A parent to child property transfer in Ontario is a legal conveyance of real estate ownership from a parent to their child, completed through Ontario’s Electronic Land Registration System (ELRS) under the Land Titles Act, R.S.O. 1990, c. L.5. Parents usually do this to simplify inheritance, reduce Estate Administration Tax, or help a child buy a first home. The transfer is permanent and creates tax, legal, and family law consequences even when no money changes hands.
You need to understand how Ontario’s Land Transfer Tax Act, the federal Income Tax Act, and the Family Law Act interact before signing any documents. One oversight can trigger Land Transfer Tax, capital gains tax, or expose the property to claims you never expected.
This guide walks you through each step, the tax rules that apply, and the risks to weigh before you transfer title.
What is a Parent to Child Property Transfer in Ontario?
A parent to child property transfer in Ontario is a registered conveyance of legal ownership in real estate from a parent (the transferor) to a child (the transferee). The transfer can be a gift, a sale, or a sale below fair market value. Each form carries different tax and legal effects. Ontario registers the transfer under the Land Titles Act through ELRS, and the Canada Revenue Agency (CRA) treats the transaction as a disposition at fair market value under subsection 69(1) of the Income Tax Act because the parties do not deal at arm’s length.
A parent to child transfer can take three main forms. A gift occurs when the parent receives no payment. A sale at fair market value treats the transaction like any other real estate sale. A sale below fair market value is still treated by the CRA as a disposition at full market value, even when the child pays less. Each structure produces a different tax outcome, and the choice shapes your Land Transfer Tax, capital gains tax, and future estate planning position.
According to the Chartered Professional Accountants of Canada, roughly $1 trillion in assets will move from Canadian baby boomers to their Gen X and millennial children between 2023 and 2026, the largest intergenerational transfer in Canadian history. A CIBC report found that 31 percent of first time homebuyers in Canada received financial help from family in 2024, up from 20 percent in 2015. Much of that support comes in the form of real estate gifts and title transfers.
How Do You Transfer Property From Parent to Child in Ontario?
You transfer property from parent to child in Ontario by following a legal process that includes getting advice, valuing the property, preparing the deed, registering the transfer with the land registry, and updating your records. Each stage needs to line up with the Land Titles Act, the Land Transfer Tax Act, and the Income Tax Act.
The process below sets out the practical steps most Ontario families follow.
1. Get Legal and Tax Advice Before You Start
Start by meeting with a real estate lawyer in Toronto and, where the numbers are large, a tax accountant. Your lawyer confirms that the transfer complies with Ontario’s land registration rules. Your accountant runs the capital gains math and tells you whether the principal residence exemption protects the gain.
Early advice keeps you from discovering a five or six figure tax bill after registration. It also helps you pick the right structure. A straight gift, a sale at fair market value, a joint tenancy, or a trust each produce different outcomes.
2. Determine the Property’s Fair Market Value
Get a professional appraisal before you draft anything. Fair market value (FMV) drives both the capital gains calculation and, in some cases, Land Transfer Tax.
Under subsection 69(1) of the Income Tax Act, the CRA treats a transfer between non arm’s length parties (which includes parent and child) as occurring at FMV. If you sell the property to your child for $500,000 when it is worth $900,000, the CRA still taxes you as if you sold it for $900,000. Worse, your child’s adjusted cost base becomes $500,000, not $900,000, which can lead to double taxation when the child sells later.
A written appraisal from a qualified appraiser gives you a defensible FMV number if the CRA ever asks.
3. Review the Tax and Financial Consequences
Work through four separate tax questions with your lawyer and accountant. Does Land Transfer Tax apply? Does the sale trigger a capital gain? Does the principal residence exemption wipe out that gain? Do the attribution rules apply because the child is a minor? Each question has its own rules, which are covered in detail below.
You should also check your mortgage. Most mortgage contracts include a due on sale clause, and adding a child to title without lender consent can put you in default.
4. Prepare and Execute the Deed of Transfer
Your lawyer drafts the Transfer/Deed of Land and the Land Transfer Tax Affidavit. If the transfer is a gift with no mortgage assumption, the affidavit states the consideration as nil and notes that the transfer is for natural love and affection.
Both parent and child sign the documents. The lawyer confirms identity under the Law Society of Ontario’s rules, checks capacity, and (where helpful) provides independent legal advice to the child to confirm the transfer is understood.
5. Register the Transfer With Ontario’s Land Registry
The lawyer files the Transfer/Deed of Land electronically through the Electronic Land Registration System. Registration makes the child the legal owner. If Land Transfer Tax is payable, it is remitted at the time of registration. In Toronto, the Municipal Land Transfer Tax is also paid at this stage.
Registration fees usually run between $70 and $200 per document.
6. Update Your Will, Insurance, and Estate Plan
Once the transfer is registered, update your will so it no longer assumes the property is yours. Tell your home insurance provider that ownership has changed so your policy stays valid. Review powers of attorney and any beneficiary designations that might reference the property.
Skipping this step creates conflicts between your registered title and your estate documents, which can cause real problems for your executor.
What Are the Tax Implications of a Parent to Child Property Transfer in Ontario?
The tax implications of a parent to child property transfer in Ontario include Land Transfer Tax, capital gains tax, the principal residence exemption, income attribution rules, and Estate Administration Tax. Each one is governed by a different statute and each one can change the total cost of the transfer by tens of thousands of dollars.
Land Transfer Tax
Ontario’s Land Transfer Tax is set under the Land Transfer Tax Act and calculated on the value of consideration given for the property. The Act does not have a named parent to child exemption. What Ontario does allow is this. When a property is gifted to a family member and no money, debt, or benefit passes to the parent, the value of consideration is nil and no Land Transfer Tax is owed. The Land Transfer Tax Affidavit lets you describe the transfer as being for natural love and affection.
The picture changes the moment a mortgage is involved. If your child takes on an existing mortgage or pays off a mortgage on the property, the Ministry of Finance treats the amount of that debt as consideration. Land Transfer Tax is then calculated on the mortgage amount. For a property in Toronto, both the provincial Land Transfer Tax and the Municipal Land Transfer Tax apply on that figure.
Ontario Regulation 696 provides an exemption for transfers between spouses or former spouses in specific circumstances. That exemption does not extend to parent and child transfers. Your lawyer should confirm which affidavit statements apply before registration.
Capital Gains Tax
Capital gains tax is a federal tax on the increase in a property’s value between when it was acquired and when it is disposed of. Under subsection 69(1) of the Income Tax Act, a transfer between a parent and child is treated as a disposition at fair market value, even if the property is gifted.
Canada’s capital gains inclusion rate remains 50 percent as of 2026 after the federal government cancelled the proposed increase to two thirds in March 2025. That means half of the gain is added to the parent’s taxable income in the year of transfer.
Here is a simple example. You bought a secondary property in 2005 for $300,000. In 2026 it is worth $1,100,000. You gift it to your adult daughter. The CRA treats you as having sold it for $1,100,000, giving you a capital gain of $800,000. Fifty percent ($400,000) is added to your taxable income for the year. Depending on your marginal rate, that can produce a tax bill over $200,000.
Principal Residence Exemption
The principal residence exemption, set out in paragraph 40(2)(b) of the Income Tax Act, can eliminate the capital gain on a qualifying home. To qualify, the property must have been your principal residence for every year you owned it, and you (or your spouse, former spouse, or child) must have ordinarily inhabited it.
If the home was always your principal residence, the transfer to your child usually produces no capital gains tax. If it was a cottage, a rental, or a secondary property, the exemption does not apply in full. It might apply to some of the years of ownership, in which case a formula reduces the taxable gain.
Be careful with partial transfers. If you add your adult child to title while still living in the home, and your child lives elsewhere, you can lose part of your principal residence exemption going forward on the share now held by your child.
Attribution Rules for Transfers to Minor Children
Subsection 74.1(2) of the Income Tax Act attributes income earned on property transferred to a related minor back to the transferor parent. If you transfer a rental property to your 15 year old child, the rent flowing from that property is taxed in your hands, not your child’s, until the child turns 18. This prevents income splitting with minor children.
Importantly, subsection 74.1(2) attributes income, not capital gains. The attribution rules for capital gains under section 74.2 apply only to transfers between spouses, not to transfers to minor children. So if the minor child later sells the property, the capital gain is usually taxed in the child’s hands, not the parent’s.
These rules stop applying once the child turns 18.
Estate Administration Tax Considerations
One common reason parents transfer property early is to reduce Ontario’s Estate Administration Tax, set under the Estate Administration Tax Act, 1998. The first $50,000 of an estate is exempt. Any value above that is taxed at $15 per $1,000 (1.5 percent) when the estate goes through probate.
For a $1,500,000 home, that works out to $21,750 in Estate Administration Tax if the home passes through probate. Transferring the property to a child during your lifetime removes it from the probate estate, saving that amount. The tradeoff is that you give up legal ownership and may trigger capital gains tax now rather than letting the estate deal with it later.
What Documents Are Required for a Parent to Child Property Transfer in Ontario?
The documents required for a parent to child property transfer in Ontario include the Transfer/Deed of Land, the Land Transfer Tax Affidavit, a professional property appraisal, identity verification, and mortgage lender consent where applicable. Each document plays a role in registering the transfer and confirming the tax position.
The main documents are given below.
- Transfer/Deed of Land. This is the core registration document, prepared electronically by your lawyer and submitted through ELRS. It identifies the parties, the land, and the consideration.
- Land Transfer Tax Affidavit. The affidavit sets out the value of consideration and any basis for nil or reduced tax. For a gift with no mortgage, it describes the transfer as being for natural love and affection.
- Property appraisal. A written FMV appraisal from a qualified appraiser supports both the land registry filing and the parent’s CRA tax filings.
- Identity documents. Under the Law Society of Ontario’s client identification rules, both parent and child must provide government issued ID.
- Mortgage lender consent. If the property is mortgaged, most lenders require written consent before title changes.
- Independent legal advice certificate. Where appropriate, the child receives advice from a separate lawyer so the transfer is not later challenged for misunderstanding.
- Updated will and estate planning documents. These are not registration documents but should be revised to reflect the new ownership.
What Are the Ownership Options Under Ontario Law?
The ownership options under Ontario law for a parent to child transfer include full transfer to the child, joint tenancy, and tenants in common. Each choice changes what happens during your lifetime and at your death.
Full Transfer to the Child
A full transfer gives your child 100 percent of the legal title. You no longer own the property. You cannot sell, mortgage, or refinance without the child’s cooperation. This is the cleanest option but the most drastic.
Joint Tenancy With Right of Survivorship
Joint tenancy means each owner holds an equal undivided interest. When one joint tenant dies, the surviving joint tenant automatically takes full ownership, outside of the estate. This avoids probate on the parent’s share. The Supreme Court of Canada in Pecore v. Pecore, 2007 SCC 17, confirmed that a parent adding an adult child as a joint tenant creates a presumption of resulting trust, which means the court presumes the child holds the property for the parent’s estate unless evidence shows a true gift was intended. Clear documentation of your intent is essential.
Tenants in Common
Tenants in common hold separate, defined shares (for example, 70 percent parent and 30 percent child). Each owner’s share passes through their will, not automatically to the other owner. This preserves flexibility in estate planning but does not avoid probate.
What Are the Risks of Transferring Property From Parent to Child?
The risks of transferring property from parent to child include loss of control, exposure to your child’s creditors and spouse, loss of the principal residence exemption, and unintended family law consequences. These risks often outweigh the tax savings if not planned carefully.
Key risks are given below.
- Loss of control. Once your child is on title, you cannot sell, mortgage, or refinance without consent. Decisions you used to make alone now require family agreement.
- Creditor exposure. If your child is sued, goes bankrupt, or has unpaid tax debts, creditors can claim against the child’s share of the property. Section 160 of the Income Tax Act can even make a child liable for a parent’s unpaid tax if a property is transferred for less than FMV.
- Matrimonial home consequences. Under section 18 of the Family Law Act, a property that is ordinarily occupied by a married child and their spouse as a family residence is a matrimonial home. Matrimonial home rules give both married spouses equal possession rights, and the full value of the home is included in the equalization of net family property, even if the child received it as a gift. A home bought by gift of inheritance is treated differently from any other gifted asset once it becomes a matrimonial home.
- Loss of principal residence exemption. Adding a child who does not live in the home can reduce the share of the property that qualifies for the exemption.
- Tax bill now rather than later. A lifetime transfer triggers deemed disposition now, rather than letting the capital gain be deferred or sheltered in the estate.
- Family conflict. Giving property to one child can create inequality with siblings, leading to disputes and estate litigation.
What Are the Alternatives to a Direct Parent to Child Transfer?
The alternatives to a direct parent to child transfer include holding the property until death through a will, using a trust, placing the property in joint tenancy as a probate planning tool, and gradual transfers through a holding structure. Each alternative offers a different balance of control, tax efficiency, and flexibility.
Transfer Through a Will
You keep the property during your lifetime and pass it to your child through your will. Capital gains tax is triggered on death (through deemed disposition under subsection 70(5) of the Income Tax Act), but the principal residence exemption may still apply. The property passes through probate, so Estate Administration Tax applies. The benefit is that you retain full control and flexibility until death.
Trusts
A trust separates legal ownership (the trustee) from beneficial ownership (the beneficiary). A parent can settle an inter vivos trust during their lifetime or create a testamentary trust in their will. Trusts can protect property from a child’s creditors, control the timing of distributions, and in some cases reduce probate costs. The new federal trust reporting rules (applicable to taxation years ending after December 30, 2023) have increased the compliance burden, so trusts are not a light choice.
Joint Tenancy as a Probate Planning Tool
A parent can add an adult child to title as a joint tenant while remaining on title themselves. On the parent’s death, the property passes to the child by right of survivorship, avoiding probate. Following Pecore v. Pecore, the parent should document their intent in writing so the arrangement is treated as a true gift rather than a resulting trust.
Sale at Fair Market Value With Financing
You sell the property to your child at fair market value and take back a promissory note. The child pays you over time. This produces a capital gain now, but it formalizes the transfer and can work well when combined with family loans or life insurance planning.
Gradual Transfer of Ownership
Instead of a single lifetime transfer, you move small percentages to the child over several years. This spreads out capital gains realization and can be combined with the principal residence exemption in a way that minimizes total tax. The approach requires careful tracking and documentation.
Frequently Asked Questions
Can I Avoid Probate by Transferring the Property to My Child Now?
Yes, transferring ownership to your child during your lifetime removes the property from your estate, so it is not subject to Estate Administration Tax when you die. Ontario’s tax is 1.5 percent on estate value above $50,000, so the savings on a $1,000,000 home are around $14,250. Against that, you need to weigh the capital gains tax you may trigger now, the loss of control over the property, and the family law and creditor risk you take on once your child is a registered owner.
Do I Pay Land Transfer Tax When I Gift Property to My Child in Ontario?
No Land Transfer Tax is payable when you gift property to your child and no money or debt changes hands. Under the Land Transfer Tax Act, tax is calculated on the value of consideration, and a pure gift has nil consideration. If your child takes on an existing mortgage or pays off your mortgage as part of the transfer, Land Transfer Tax applies to the amount of that debt. In Toronto, Municipal Land Transfer Tax applies on the same basis.
What Happens to the Principal Residence Exemption When I Transfer My Home to My Child?
The principal residence exemption can eliminate the capital gain on the transfer if the home was your principal residence for every year you owned it. You designate it on Form T2091 when filing your tax return. The exemption does not apply to cottages, rentals, or second homes unless they qualify. If you add your adult child to title and the child does not live in the home, you may lose part of the exemption on the share of the property now held by your child going forward.
What Tax Do I Pay if I Sell My Property to My Child Below Fair Market Value?
You pay capital gains tax based on fair market value, not the sale price. The CRA applies subsection 69(1) of the Income Tax Act to treat the sale as if it occurred at FMV, so selling low does not save you tax. Your child’s cost base becomes the lower actual price paid, which increases their eventual tax when they sell. This creates double taxation on the same gain, which is why transfer at FMV or by true gift is almost always better.
Can I Transfer Property to My Minor Child in Ontario?
Yes, but you need to know the rules that follow. The attribution rules under subsection 74.1(2) of the Income Tax Act tax income from the property (such as rent) back to you until your child turns 18. Capital gains are not attributed back. A minor also cannot deal with land in their own name, so the property usually has to be held in trust or by a guardian of property. Most families prefer to wait until the child is 18 to avoid the trust complexity and the income attribution.
Should I Use a Trust Instead of a Direct Transfer?
A trust can make sense when you want to protect the property from a child’s creditors or spouse, control when the child takes full ownership, or transfer wealth to several beneficiaries with different needs. Trusts cost more to set up and run, and the federal bare trust reporting rules have added compliance steps. For a single property going to a single adult child with a stable life, a direct transfer or a well drafted will is often simpler. For more complex family situations, a trust structured by an experienced lawyer can be worth the cost.
Takeaway
A parent to child property transfer in Ontario is a serious legal step that combines real estate law, tax law, and family law. The main decision points are whether to gift, sell, or use a trust, how the transfer affects your Land Transfer Tax, capital gains tax, and principal residence exemption position, and what risks you are willing to accept around control, creditors, and family law. The rules under the Land Transfer Tax Act, the Income Tax Act, and the Family Law Act work together in ways that are easy to miss without advice.
Before you register anything, sit down with a real estate lawyer and, where the numbers are large, a tax accountant. The cost of proper advice is always lower than the cost of fixing a transfer that was done for the wrong reason or in the wrong structure. If you are considering a transfer to a child, Insight Law Professional Corporation can walk you through your options, prepare the deed, and register the change so the transfer stands up to CRA and Ministry of Finance scrutiny.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
