Canada has no gift tax. It has a rule that produces the same result, and most families discover it after the transfer is registered rather than before.
The rule behind everything: deemed disposition
When you transfer real estate to your child, the Canada Revenue Agency treats you as having sold it at fair market value – whether you charged full price, one dollar, or nothing. The gain between what you paid and what it is worth today is taxed in your hands, at a 50% inclusion rate. The proposed increase to two-thirds was cancelled in March 2025.
If the property was your principal residence throughout, the principal residence exemption usually eliminates the gain. You still report the disposition. If it was a cottage, a rental, or a second home, expect a bill.
Get the tax advice before you see a lawyer. The lawyer registers the transfer; the accountant tells you what it costs.
Why selling to your child for $1 backfires
It is the most expensive shortcut in this area, because the same growth is taxed twice.
- You are deemed to have sold at fair market value, so your capital gain is unchanged. The dollar saves you nothing.
- Your child’s adjusted cost base becomes what they actually paid – one dollar. When they eventually sell for $900,000, their gain is $899,999, not the increase since the transfer.
If your child cannot afford the house, sell at fair market value and lend them the difference, or forgive part of the price in your will. Both work. The dollar sale does not.
Land transfer tax: it turns on the mortgage
Ontario has no parent-to-child exemption. What it has is a rule about consideration.
Where nothing whatsoever passes between you – no money, no assumed debt, nothing indirect – there is no consideration and no land transfer tax. A clean gift of a mortgage-free home usually registers tax-free.
Assuming a mortgage changes that. A liability taken on by the recipient counts as consideration. Transfer a home with $300,000 still owing and your child is treated as having paid $300,000: roughly $2,975 in provincial land transfer tax, and close to double that inside Toronto once the municipal tax applies.
Gifting a house with a mortgage is never free, and the bill lands on the child. Pay the mortgage down or discharge it before transferring where you can.
Adding a child to title
This is the most common approach and the least understood. Families do it to avoid probate, which in Ontario costs $15 per $1,000 of estate value above $50,000 – $11,250 on an $800,000 estate.
That is a real saving. Here is what it buys:
| Gained | Taken on |
|---|---|
| The property passes by survivorship, outside the estate | Partial disposition today – tax on the share transferred |
| No estate administration tax on that asset | Their share is exposed to their creditors |
| No probate delay for the survivor | Their share is a family asset in their divorce |
| You cannot sell or refinance without their signature | |
| If they own their own home, their share loses the principal residence exemption |
There is also the question of what you meant. Where a parent adds an adult child to title, the law presumes the child holds that interest in trust for the parent’s estate – not as a gift – unless the documentation says otherwise. If you intend a gift, record it in writing at the time. Families litigate this after the funeral, and the sibling who was not added to title is usually the one who starts it.
The four ways to pass a home to the next generation
Sell at fair market value. Cleanest tax outcome. Your child’s cost base is set at full value, so they are taxed only on growth from here. You can take back a mortgage or lend the funds.
Gift it outright now. No land transfer tax if no mortgage is assumed. The deemed disposition still applies. It is irreversible – the asset becomes exposed to your child’s creditors, spouse and decisions on the day it is registered.
Add them to title as joint tenants. A partial version of the above, with probate savings and every risk in the table.
Leave it in your will. No tax while you are alive, no loss of control, no exposure to your child’s circumstances. The estate pays administration tax, and the beneficiaries inherit at the date-of-death value, which resets their cost base. For most families this remains the cheapest option overall – the probate saving is usually smaller than the tax and risk created by transferring early.
What does not exist in Canada: transfer-on-death deeds and beneficiary deeds. These are American instruments, recommended constantly by American websites, and Ontario’s land registry does not recognise them. Joint tenancy, a trust, or a will are the Canadian equivalents.
What about attribution rules?
Less relevant than most articles suggest. The rules that attribute income back to the person who gave the property apply to transfers to a spouse or to a related minor – not to gifts to adult children. Once your child is 18, income and gains on property they own are taxed in their hands.
Attribution genuinely matters if you are transferring to a spouse, to a child under 18, or through a family trust. Those are accountant conversations.
Before you transfer, ask these
- Can you afford to lose control of it? A gift cannot be undone because the relationship changes.
- Do you intend to keep living there? Put the arrangement in writing. An unwritten “I can stay as long as I like” is worth nothing against your child’s future creditors or spouse.
- Are there other children? Transferring the house to one child during your lifetime is a decision your will cannot later balance if the house was your main asset.
- Is the probate saving worth it? Run the number. It is often smaller than the tax and risk of moving the asset early.
Frequently asked questions
How do I transfer property to a family member tax-free in Canada? There is no gift tax, and no land transfer tax where no mortgage is assumed. Capital gains tax still applies unless the principal residence exemption covers the property – the CRA treats the transfer as a sale at fair market value regardless of what you charged.
Can I gift a house to my child in Ontario? Yes, and the registration itself is straightforward. What people miss is that the disposition still has to be reported on your own tax return in the year of the transfer, even where the principal residence exemption means no tax is payable.
Can I sell my house to my son for $1 in Canada? It can be registered and it backfires. You are deemed to have sold at fair market value, so your tax is unchanged, and your son’s cost base is set at one dollar – so the same growth is taxed a second time when he sells.
What is the best way to add someone to a deed? Through a lawyer, with the tax advice settled first and a signed declaration of your intention prepared at the same appointment. That one page is what prevents an argument between your children years later about whether the transfer was a gift or an administrative convenience.
What is the best way to transfer property to your kids? For most families, through the will – no tax while you are alive, no loss of control, and the beneficiaries inherit at the date-of-death value, which resets their cost base.
Can I leave everything to one child and not my spouse? You can write the will that way, but a married spouse in Ontario can elect within six months of death to take an equalization payment under the Family Law Act instead of what the will gives them. Disinheriting a spouse rarely works as intended.
Does transferring the house avoid probate? Joint tenancy does, for that asset. It does not avoid capital gains, and it exposes the property to your child’s creditors and divorce while you are still alive.
Can a child take over a parent’s mortgage? Only with the lender’s approval, and their assumption of the debt triggers land transfer tax on that amount.
Talk to a Toronto real estate and estates lawyer
LD Law LLP handles both sides of this: the title transfer itself, and the will or estate plan it should fit into. We will register what your accountant recommends, document the intention properly, and tell you plainly when leaving it in the will is the cheaper answer.
1551 Bloor Street West, Toronto · 416-747-9900
General information about Ontario and Canadian tax law as of August 2026. Not legal or tax advice.