Bare Trust for Real Estate in Ontario: How It Works

You may be named on title to a house, condo or piece of land, but someone else is the one who really owns it, pays for it and decides what happens to it. Or you may be the real owner and want a trusted person or company to hold the legal title for you. In either case, people often call the arrangement a bare trust.

This article explains in plain language what a bare trust is, why people use one, how it shows up on title, and what land transfer tax and CRA filing questions can arise. It is general information only. The right answer for your property depends on your documents and your facts.

What a bare trust is

CRA describes a bare trust as one where the trustee has no significant powers, acts only on the instructions of the beneficiary, and only holds legal title. The Income Tax Act does not define the term, so the description comes from CRA's guidance rather than a statutory definition.

Put simply, there are two kinds of ownership. Legal title is the name on the land registry. Beneficial ownership belongs to the person who is really entitled to the property and its benefits. In a bare trust, the person on title is just a placeholder. They do not make independent decisions about the property.

People set up this kind of arrangement for many reasons, such as simplifying who signs documents, keeping a name off the public record, or dealing with a family situation. Whatever the reason, the arrangement only works as intended if it is clearly documented and everyone actually follows it.

How it shows up on title and in paperwork

Only authorized Teraview account holders and their registered users can create and submit documents in Ontario's electronic land registration system. Authorized groups include lawyers, conveyancers, surveyors, real estate agents, mortgage brokers and financial institutions. In practice, that means a lawyer or other authorized professional registers the transfer, not you directly.

When land is conveyed between a trustee and the beneficial owner, and beneficial ownership has not changed since the transferor obtained registered title, it is taxed at nil consideration. An electronic registration needs nominal-consideration statement 9049 plus 9051, 9052 or 9053. The Ministry no longer requires a supplementary trust affidavit, but it can later ask for evidence of the trust.

That last point matters. Even if no trust paperwork is filed at registration, you should keep a signed written declaration of trust, so that you can show what the arrangement really was if you are ever asked.

Land transfer tax and the 30-day rule

Land transfer tax is payable by the person who acquires land or a beneficial interest in land, and it is payable when the transfer is registered. Because a beneficial interest counts, the tax can come up even when nothing is registered on title.

A change in beneficial ownership after July 18, 1989 that is not registered on title within 30 days is taxable under section 3 of the Land Transfer Tax Act. A Return on the Acquisition of a Beneficial Interest in Land must be filed within 30 days of the change, and later registrations that record the same change are not taxed again. Failing to file a required return for an unregistered disposition within 30 days may lead to assessment of tax, penalty and interest.

Whether a particular arrangement counts as an unchanged bare trust or a real change of ownership is a question of facts. Get advice before you assume nil tax applies.

CRA reporting for bare trusts

CRA uses trust code 307 for a bare trust. For taxation years ending in 2025, CRA says it does not expect bare trusts to file a T3 return or Schedule 15, but some bare trusts may have to file for years ending on or after December 31, 2026.

For other trusts, T3 returns are due no later than 90 days after the trust's tax year-end, and trusts other than bare trusts must file a T3 with Schedule 15 for 2025 year-ends unless specific conditions are met.

This area has been changing, and part of the relief depends on proposed legislation. Check the current year's requirements with an accountant before relying on any earlier guidance. Separately, how a bare trust affects your income tax, such as who reports rental income or a later sale, is a question for an accountant.

What to do next

• Write down who the beneficial owner is, who is on title, and why. Have both sign a declaration of trust.
• Keep records showing who paid the down payment, mortgage, taxes and repairs.
• Ask a lawyer to review the plan before title is registered or changed, including any mortgage lender or title insurer questions.
• If title will later move between the trustee and the beneficial owner, ask the lawyer how the land transfer tax statements should be completed.
• If any beneficial ownership change is not being registered, diarize the 30-day return deadline.
• Ask an accountant whether a T3 filing applies to the trust for the current year.

Frequently asked questions