Transferring ownership of property from parent to child in Canada is simple to register and easy to get wrong. The registration takes an afternoon. The tax consequences last a generation. Below is what actually happens to the Canada Revenue Agency and Ontario land transfer tax under each option, and the two mistakes that cost families the most money.
Before anything else: get tax advice first. A lawyer registers the transfer; an accountant tells you what it costs. Do these in the right order.
The rule that governs everything: deemed disposition
Canada has no gift tax. It has something that behaves like one.
When you transfer real estate to your child, the CRA treats you as having sold it at
fair market value – even if you charged nothing, even if you charged a dollar. The difference between that value and what you originally paid is a capital gain, and
50% of it is added to your income in the year you transfer. The proposed increase to a two-thirds inclusion rate was cancelled in March 2025, so half remains the operating number.
If the property was your principal residence for every year you owned it, the principal residence exemption usually erases the gain. You still have to report the disposition on your return. If it was a cottage, a rental, or a second property, expect a real tax bill.
Can I sell my house to my son or daughter for $1?
You can register it. You should not.
Selling to a child for a dollar triggers double taxation, and it is the single most expensive mistake in this area:
- You are deemed to have sold at fair market value, so you pay tax on the full gain anyway. The dollar saves you nothing.
- Your child’s adjusted cost base is set at the actual price paid – one dollar. When they sell for $900,000, their gain is $899,999, not the increase since the transfer.
The same property gets taxed twice on the same growth. If your child needs help affording the home, sell at fair market value and lend them the shortfall, or forgive part of the price through your will. Both work. The dollar sale does not.
Land transfer tax: the mortgage trap
Ontario has no parent-to-child exemption from land transfer tax. What it has is a rule about consideration.
If nothing whatsoever passes between you and your child – no money, no assumed debt, nothing indirect – there is no consideration, and
no land transfer tax is payable. A clean gift of a mortgage-free home usually registers tax-free.
The moment a mortgage enters the picture, that changes.
Assuming a liability counts as consideration. If you transfer house to child with mortgage of $300,000 still registered, your child is treated as having paid $300,000 and land transfer tax is calculated on that amount – roughly $2,975 provincially, and about double inside Toronto once the municipal tax applies. Gifting a house with a mortgage is therefore never free, and the bill lands on the child.
Discharge or pay down the mortgage before transferring where you can. Where you cannot, budget for the tax rather than discovering it at registration.
Adding an adult child to the title
Adding your son or daughter to your house deed is popular because it avoids probate on your death. It also carries risks most people are never told about.
| What you gain |
What you take on |
| Property passes by survivorship, outside the estate |
Partial disposition now – tax on the share you gave away |
| No estate administration tax on that asset |
Your child’s share is exposed to their creditors and their divorce |
| No probate delay for the survivor |
If they own their own home, their share loses the principal residence exemption |
|
You cannot sell or refinance without their signature |
The tax implications of adding a child to a deed in Ontario depend on how much you transfer. Give away half of a home that has appreciated, and you have disposed of half of it today at today’s value. On a principal residence the exemption normally covers it. On any other property, it does not.
There is also the question of what you actually intended. Where a parent adds an adult child to title for convenience, the law presumes the child holds that interest in trust for the parent’s estate – not as a gift – unless the paperwork says otherwise. If you mean it as a gift, say so in writing at the time. Families litigate this after the funeral.
The four ways to pass a home to the next generation
Sell at fair market value. Cleanest tax result. Sets your child’s cost base at full value, so they are only taxed on growth from here. You can hold a mortgage back or lend the money.
Gift it outright now. No land transfer tax if no mortgage is assumed. Deemed disposition still applies. Irreversible – once it is theirs, it is exposed to their creditors, their spouse, and their decisions.
Add them to title as joint tenants. A partial version of the above, with probate savings and the risks in the table.
Leave it in your will. No tax while you are alive, no loss of control, no exposure to your child’s problems. The estate pays estate administration tax and the beneficiaries inherit at the value on your date of death, which resets their cost base. For most families this is still the least expensive route.
What is not an option in Canada: transfer-on-death deeds and beneficiary deeds. These exist in parts of the United States and are frequently recommended online by American sources. Ontario land registry does not recognise them. Joint tenancy, a trust, or a will are the Canadian equivalents.
What about attribution rules?
Less than you have probably read. The attribution rules that push income back onto the giver apply to transfers to a
spouse or to a
related minor – not to gifts of property to adult children. If your child is over 18, income and gains on the property they now own are theirs and taxed in their hands.
Where attribution genuinely matters is transfers to a spouse, or to a child under 18, or where a family trust holds the property. If any of those describe your plan, that is an accountant’s conversation, not a blog’s.
Frequently asked questions
Can I gift a house to my son without paying taxes in Canada? There is no gift tax, and no land transfer tax if no mortgage is assumed. But the CRA treats you as having sold at fair market value, so
capital gains tax can still apply unless the principal residence exemption covers the property.
Can a parent transfer a house to a child tax-free? Only where the principal residence exemption eliminates the gain and no mortgage is assumed. A cottage, rental or second property will almost always produce a tax bill for the parent.
What is the best way to transfer a house from parent to child? For most families, through the will. The beneficiary inherits at the date-of-death value, which resets their cost base, and you keep control while you are alive. Lifetime transfers make sense only where there is a specific reason for one.
Is it better to gift or inherit property in Canada? Inheriting is usually better. A gift triggers a deemed disposition today at today’s value and exposes the asset to your child’s creditors and divorce immediately. Inheriting defers everything and resets the cost base.
What is the most tax-efficient way to leave a property to a child? Where it is your principal residence, leaving it in your will is normally both the simplest and the cheapest. Where it is not, the answer depends on your other assets and should be modelled by an accountant before anything is registered.
Can I add my son to my house title in Ontario? Yes, and it is a partial disposition for tax purposes. It also exposes that share to his creditors and his spouse, and you can no longer sell or refinance without his signature. Record in writing whether you intend it as a gift or for convenience – families litigate this point after the funeral.
Can I put my children on my house title to avoid probate? It does avoid estate administration tax on that asset, which is $15 per $1,000 above $50,000. Weigh that saving against the tax on the transferred share and the exposure to your child’s circumstances. Often the probate saving is the smaller number.
Can I sell my house to my child for $1? You can register it, and it is the most expensive mistake in this area. You are still deemed to have sold at fair market value, and your child’s cost base is set at one dollar – so the same growth is taxed twice.
Talk to a Toronto title transfer lawyer
Zinati Kay has handled title transfers across the GTA for more than 25 years, with fixed
closing costs on standard transfers and remote signing anywhere in Ontario. Bring us the plan your accountant approves and we will register it correctly the first time.
416-321-8766 · john@zinatikay.com
General information about Ontario and Canadian tax law as of August 2026. Not legal or tax advice for your situation.