As parents consider retirement or downsizing, many opt to pass down their homes to their adult children. However, this decision requires careful thought and proper legal guidance to ensure it benefits everyone involved. If you’re looking for information on how to transfer a house title or property in Canada, here’s what you need to know.

Rule Number 1 – Consider the Tax Implications

Before proceeding with any transfer of property, it’s crucial to understand the potential tax implications.
Consult with an Accountant, or tax advisor to avoid costly mistakes. Proper tax advice can save you and your family significant financial burdens down the line.

How to Transfer Real Estate Title from Parent to Child 

There are several methods to transfer real estate title from a parent to a child. Each option has its pros and cons, and it’s essential to consider the best choice for your situation:

1. Sell Your Home to Your Child

You can sell your home to your child at fair market value (FMV), allowing them to take ownership while you continue living there. This option can include:

Financing: You may choose to loan your child money to facilitate the purchase.

Tax Benefits: Transferring at FMV helps avoid attribution rules and potential tax complications.

However, selling for a nominal amount, like one dollar, typically doesn’t defer capital gains tax and can lead to other tax consequences.

2. Gift Your Property

Gifting your home to your children is another option. This method is often facilitated through a revocable living trust, allowing you to retain control while ensuring a smoother transition of ownership. Keep in mind:

CRA Scrutiny: Large gifts may attract attention from the Canada Revenue Agency (CRA), which can lead to increased tax liabilities.

Financial Responsibility: Ensure your child is prepared to manage the home, including any ongoing costs.

3. Bequeath Your Property

You can set up a trust outlining how your property should be distributed upon your death. This option allows for equitable arrangements among heirs, helping to avoid disputes. Professional legal guidance is essential when establishing such trusts.

4. Deed/Title Transfer

Transferring the title of your home directly to your child is another method. This can involve:

Transfer-on-Death Deed: In some provinces, this allows the property to pass directly to your child upon your death.

Mortgage Considerations: You can add your child as a co-signer or transfer the mortgage entirely. Be aware of potential land transfer taxes.

To minimize taxes when gifting a family home, consider these strategies:

✔ Income Splitting: Provide gifts to adult children who can utilize deductions and credits.

✔ RRSP Contributions: Assist your child in maximizing their RRSP contributions to reduce taxable income.

✔ Educational Benefits: Consider depositing Canada Child Tax Benefits into your child’s accounts.

Get Professional Advice from Simply Legal

Transferring the title of your home to your child involves various options, each with its benefits and drawbacks. Our team at Simply Legal can help you navigate this complex process and determine the best option for your family. We understand the intricacies of property law and can ensure that your transfer is handled smoothly and efficiently.

Schedule a FREE consultation now and learn more about how we can assist you with property transfers. Let us help you make informed decisions for your family’s future.