How Does Holding Property in Trust Work in Ontario?
When you hold property in trust, your name is on title, but someone else is the real owner. Legal ownership is who is registered on title. Beneficial ownership is who is entitled to the benefit of the property. That split matters, because the person named on title is not always the person who owns the property in substance.
Land transfer tax can apply even when nothing is registered. It applies to an unregistered disposition of a beneficial interest in land, it is due 30 days after the disposition, and a trustee must file a return within 30 days of becoming aware of it. Whether tax applies to a transfer to a bare trustee, or to adding a family member to title, depends on what consideration or assumed mortgage passes and whether beneficial ownership changes.
Anyone can search current and historical property records through OnLand for a fee. A trust arrangement that exists only in people's understanding will not appear there. Because the rights of the person on title and the real owner depend on the facts and the paperwork, get the arrangement written down and speak with a lawyer before you take title or hand it over.
Key takeaways
- Legal ownership is who is on title, while beneficial ownership is who is entitled to the benefit of the property, and the two can be different people.
- Land transfer tax also applies to an unregistered disposition of a beneficial interest in land.
- That tax is due 30 days after the disposition, and a trustee must file a return within 30 days of becoming aware of it.
- Whether tax applies when you add someone to title or transfer to a bare trustee depends on what consideration or mortgage passes and whether beneficial ownership changes.