Gifting Property to Family or Adding Them to Title

Is there a gift tax when I give a house to my child?

Canada does not impose a separate gift tax on an ordinary gift of a house to a child. The child generally does not report the gift as income, but the parent is normally treated as selling the property at its fair market value on the gift date, even though no money changes hands (CRA: amounts not taxed; CRA: transfers of capital property).

If that deemed sale produces a capital gain, the parent may owe income tax without receiving sale proceeds. If the parent does not pay, a family member who received property for less than its value can be held liable for the parent's tax for that year and earlier years, up to the value received minus anything paid (Income Tax Act, section 160). A gifted property's capital-gain cost to the child is generally its fair market value at the gift date; a rental building's depreciation cost can differ (Income Tax Act, section 69; section 13). If the parent deducted depreciation on a rental building, some deductions may also be added back to income on transfer. This is called recaptured capital cost allowance (CRA: capital cost allowance on rental property). Special farm and fishing property rules can defer tax in some family transfers; an ordinary rental does not get that relief merely because the recipient is a child (CRA: transfers of capital property).

What if I sell to my child for a token amount or below market value?

A below-market sale to a child can be worse than a genuine gift for income tax. The parent is generally deemed to receive fair market value, while the child's capital-gain cost is generally the amount paid; a depreciable building has separate capital-cost rules for claiming depreciation (Income Tax Act, section 69; section 13).

That mismatch can expose the same growth in value to tax when the child later sells. Establish whether the transaction is a gift, a sale, or a mixed transaction before signing. Obtain a defensible valuation and record any cash, debt assumed, and beneficial interest transferred. A mortgage can also change provincial transfer tax even if the stated price is nominal (Ontario: nominal consideration).

The first two rows follow section 69 of the Income Tax Act. The title-only result depends on the definition of disposition in section 248 and the actual legal arrangement.

Does adding my child to title count as selling part of the property?

Adding a child to the deed is not enough, by itself, to decide the income-tax result. If the child receives a real beneficial share, the parent has generally disposed of that share, with fair-market-value proceeds on a gift. In common-law provinces and territories, if the child holds legal title solely for the parent, the parent may remain the beneficial owner and a title-only change may not be a disposition. Quebec trust law does not use that legal-and-beneficial-ownership split, so a Quebec title arrangement needs its own legal analysis (Income Tax Act, sections 69 and 248; CRA: bare trusts).

The distinction is factual. Record who paid for the property, who can occupy or sell it, who receives rent and sale proceeds, who bears costs and losses, and whether the child must follow the parent's instructions. CRA says the treatment of a trust depends on the facts and provincial private law. A signed declaration that matches the family's actual conduct is more useful than an undocumented statement made after a later sale. Transfers into a trust can engage separate rules even without a change in beneficial ownership, so review the deed and declaration together before registration (Income Tax Act, sections 69 and 248).

Can I transfer a property to my spouse without paying tax now?

A Canadian resident's transfer of capital property to a resident spouse or common-law partner generally rolls over, postponing the gain. Land generally transfers at its adjusted cost base; a depreciable rental building uses its share of the class's undepreciated capital cost, with its depreciation history carried over. The transfer does not reset cost to market value. The transferor can opt out in the transfer-year return by attaching a letter signed by both spouses or partners, in which case a fair-market-value disposition generally results (Income Tax Act, section 73; CRA: transfers of capital property).

The rollover defers income tax; it does not settle who reports later rent or gain, and provincial transfer tax has its own rules. Both people must be resident in Canada at the time for the standard section 73 rollover described here. An election out is consequential and should be decided before filing the transfer-year return.

Who reports rent and a later gain after the transfer?

The person on the deed is not always the person who reports rent or a later gain. Attribution means tax law makes the giver report income from property now owned by someone else. A child who truly owns a share generally reports that share's later capital gain, while a parent may report rent from property transferred to a minor child (Income Tax Act, sections 74.1 and 74.2).

These are the ordinary income attribution, spousal gain attribution, separation exception, and bare trust reporting results. An actual sale for fair market value can avoid attribution only if the statutory conditions are met; for a spousal sale these include electing out of the rollover, and any debt owed for the property must carry at least the prescribed or an arm's-length interest rate, paid within 30 days after each year-end (Income Tax Act, section 74.5). Rent can still be taxed to the parent when an adult child owes the parent an interest-free or low-interest debt for the property and reducing tax was one of the main reasons (section 56(4.1)). For preparing the rent schedule, see Rental income in Canada. For the tax on a later sale, see Selling a rental property.

Can my principal residence exemption cover the gain on a gift?

The principal residence exemption can reduce or eliminate the parent's capital gain on a deemed sale if the gifted home qualified as the parent's principal residence for the relevant ownership years. A gift still counts as a disposition to report, even if the exemption eliminates the gain (CRA: principal residence folio; CRA: reporting a principal residence sale).

The answer can change if the house was rented or only partly used as a residence. Designating this home can also affect another home owned by the family unit. See Principal residence exemption for the calculation and designation. A short-held property can raise separate property flipping rules.

Will my child's share qualify for their own principal residence exemption?

Only if the child owns a beneficial share and that home meets the child's own principal residence conditions for the years claimed. Joint ownership can qualify. Usually the child, their current or former spouse or partner, or their child must ordinarily live there in the year; a valid change-of-use election can cover some years without occupancy. A parent living there does not, by itself, meet the occupancy test for an adult child who lives elsewhere. The exemption also depends on the child's years resident in Canada (CRA: principal residence folio).

A child listed only as bare trustee owns no beneficial share to shelter. A child under 18 all year with no spouse or common-law partner normally shares the parent's family unit, which generally cannot designate a second home for the same year (CRA: principal residence folio). A child who owns a share should track its acquisition date and value, occupancy, Canadian residence, and any other home designated by the family unit. See Principal residence exemption for those rules.

Does a child or parent holding title as a bare trustee file a T3?

Some express bare trusts must file a T3 return and Schedule 15 for this tax year. An exception can apply when related individuals hold legal title to real property that would qualify as a principal residence of at least one of them if designated for the year. Whether a title arrangement is a trust at all depends on provincial law and the documents (Income Tax Act, section 150; CRA: bare trust questions).

That family residence exception has exact conditions; a rental held by a parent solely for an adult child may not fit it. CRA says more filing-season guidance is forthcoming. If a bare trust is reportable, the beneficial owner still reports its rent and gains on their own return (CRA: bare trust questions). A reportable trust's T3 is due within 90 days after its year-end, so check its status before then rather than assuming past-year relief still applies (Income Tax Act, section 150).

Is land transfer tax due when I add a family member to title?

Provincial land transfer or property transfer tax may apply even when federal income tax does not. The province where the land sits, consideration including assumed mortgage debt, and available family exemptions determine the charge. A title-only trust arrangement can also require provincial filings (Ontario: nominal consideration; British Columbia: family principal residence transfers).

A short-held BC property gift can also raise BC home flipping tax. See Property flipping and assignment sales for exemptions and filing rules (British Columbia: flipping tax exemptions). Ask the conveyancing professional to price and document provincial and municipal charges before the deed is registered.

What do I report in the transfer year?

Report a genuine disposition on the transferor's income tax return for the transfer year, including a deemed sale from a gift. If the home was a principal residence, report the disposition on Schedule 3, tick the designation box at line 17900, and complete Form T2091(IND), even when the exemption removes the gain. A rental transfer may also require reporting recaptured capital cost allowance (CRA: transfers of capital property; CRA: principal residence reporting).

If you elect out of a spousal rollover, attach the letter signed by both of you to the transfer-year return (Income Tax Act, section 73; CRA: transfers of capital property). If legal title changes without beneficial ownership changing, establish that result from the documents before deciding there is no capital disposition. Separately check the provincial transfer tax return and whether a T3 and Schedule 15 are due. Gather the purchase records and improvements, prior depreciation claims, a current valuation, the deed and trust declaration, mortgage statements, and evidence of who will collect rent and sale proceeds.

Example

Illustrative Canadian dollars; no tax amount is calculated. A parent bought vacant investment land for $200,000. It is now worth $600,000, with no mortgage, selling costs or improvements. The parent wants to move it to an adult child.

• Outright gift: the parent is treated as receiving $600,000 and has a $400,000 capital gain before tax rules. The child's starting cost is $600,000.
• Gift of a half share: if half is worth $300,000 and half the parent's cost is $100,000, the parent has a $200,000 capital gain before tax rules. The child's cost of that half is $300,000.
• Sale for $1: the parent's deemed proceeds are still $600,000, but the child's starting cost is generally $1. If the child then sells for $600,000 with no further costs, their gain before tax rules is $599,999.
• Title only: if the child holds legal title for the parent and receives no beneficial share, the parent remains the economic owner. The result depends on the deed and any trust arrangement.

Different for you?

• The home was your principal residence, a rental, or both: see Principal residence exemption for designation and mixed-use rules.
• The property earns rent after the transfer: see Rental income in Canada.
• Your family member later sells a rental: see Selling a rental property.
• You are considering a corporation instead: see Holding and investment corporations.
• Your child lives in the United States: their US reporting is covered in Gifts and inheritances from abroad.
• The property is a new home or GST/HST may apply: see GST/HST on residential property.
• You are transferring a mortgaged rental, making a spousal election, or changing title without changing beneficial ownership: have the deed, valuation, mortgage and tax history reviewed before signing; see Tax preparation.