Do Beneficiaries or the Estate Pay Tax on Jointly Owned Property After a Death in Ontario?

Income tax and Estate Administration Tax are separate questions. Under the Income Tax Act, a deceased person is considered to have sold all their capital property just before death, which may produce a capital gain, even if the property passes by survivorship. Jointly owned property that passes automatically to the other owner is not counted in the estate's value for Estate Administration Tax.

Property transferred to a surviving spouse or common-law partner who is resident in Canada can roll over without immediate gain, if locked in for them within 36 months of death, and some or all of the gain on a principal residence may be exempt. A joint asset that the survivor holds on resulting trust for the estate does not escape the tax, because property held in another person's name is included.

Adding a child to title can also trigger tax, because a gift of capital property is treated as a sale at fair market value, and the automatic rollover applies to spouses and common-law partners, not children (except qualifying farm or fishing property). A lawyer or accountant can confirm your situation.