Is there tax when I transfer property from a parent to a child in Ontario?

There are two main taxes to think about: Ontario land transfer tax and federal income tax.

Land transfer tax in Ontario applies to most property transfers, including gifts between family members. The tax is calculated on the fair market value of the property at the time of transfer, following the standard tiered rate schedule. There is no general parent-child exemption (unlike the spousal exemption). If the child is a first-time buyer and the property will become their principal residence, they may qualify for the first-time buyer land transfer tax rebate of up to $4,000.

On the income tax side, CRA deems the parent to have sold the property at fair market value on the date of transfer, regardless of what the child actually paid. Any capital gain accrued since the parent acquired the property will be reportable. If the home was the parent's principal residence for every year they owned it, the gain can usually be sheltered by the principal residence exemption. Rental or secondary properties will not qualify, and a portion of the gain could be taxable.

Professional advice from both a real estate lawyer and an accountant is essential before completing this kind of transfer.