What Is a Trust Agreement for Property and When Do You Need One in Ontario?
A trust agreement for property is a written document saying that the person on title holds the property for someone else, who is the true owner. It is common when a relative or partner is on title, for example so a child can get a mortgage. Because it is a contract, what it must say depends on your arrangement, and a lawyer can confirm the terms.
For tax purposes, CRA describes a bare trust as one where the trustee is essentially an agent for the beneficiaries. Bare trusts do not have to file a T3 return or Schedule 15 for taxation years ending on or after December 31, 2024 and before December 31, 2026, but reportable bare trusts may have to file for years ending on or after December 31, 2026.
Some arrangements are excluded from the definition of a reportable bare trust, including a parent on title so a child can obtain a mortgage, and related persons holding a property that is their principal residence. A written record also matters because, when land is granted to two or more people, they are treated as tenants in common unless the document clearly shows joint tenancy, but this does not apply to executors or trustees.
Key takeaways
- CRA describes a bare trust as one where the trustee is essentially an agent for the beneficiaries.
- Bare trusts do not have to file a T3 return or Schedule 15 for taxation years ending on or after December 31, 2024 and before December 31, 2026, but reportable bare trusts may have to file after that.
- A parent on title so a child can obtain a mortgage, and related persons holding their principal residence, are excluded from the definition of a reportable bare trust.
- When land is granted to two or more people, they are treated as tenants in common unless the document clearly shows joint tenancy, but this does not apply to executors or trustees.