Gifting property in Ontario – RMS Estates Law

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Gifting property in Ontario

Raluca M. Soica
September 8, 2023

The following blog will highlight the dynamics of gift real estate in Ontario.

A lot of parents want to gift real estate to help their children or extend their legacy, or in some instances both. Gifting real estate can have complex implications. Ontario has two forms of real estate gifts: (1) inter-vivos (i.e. gifts that are given while the donor is alive) and (2) testamentary (gift that take place once the donor has passed away).

Below are some considerations to take into account if you are thinking of gifting property:

Usually, a family member will want to transfer a property to a child or loved one for far less than the current market value. The problem with doing so is that the donor may have to pay capital gains on the actual fair market value. In addition, the donnee may still have to pay capital gains later for the property if they decide to re-sell it, leading to double taxation.
If the property is subject to a mortgage or line of credit, the donnee must arrange to pay out the mortgage before title is transferred to them.
If the donor is a non-resident of Canada, the CRA will take the proper steps to ensure that it has security from the donor to cover the taxes they owe. Non-residents are also required to pay tax on any gain realized on the sale of their property to the CRA. In addition, effective January 31, 2023, non-Canadians are prohibited from buying residential property for two years, making the process of transferring even more lengthy and expensive.
Strict legal requirements such as the deed of gift, title transfer, arranging to pay for outstanding mortgages or lines of credit must be met.

While the problems with gift-giving real estate may seem daunting, there are alternative solutions. Seeking legal counsel will enable you to pinpoint the most suitable options tailored to your specific situation. If you are thinking of embarking on this journey, RMS Estates is available to offer guidance, address your inquiries, and help you find the right solution.

PLEASE NOTE THAT THE CONTENT OF THIS BLOG IS MERELY FOR INFORMATION PURPOSES AND DOES NOT CONSTITUTE LEGAL ADVICE.

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