Is Estate Administration Tax Payable on a House in Ontario?

When someone dies owning a house in Ontario, the house is often the largest asset in the estate. That makes it the biggest driver of the Estate Administration Tax, which many people call probate tax. Families want to know how much of the home's value counts and whether the tax can be avoided.

The answer depends mostly on how the home was owned and what is owed on it. This article walks through how the tax is calculated, how different ownership setups are treated, and what the estate trustee must file afterward.

How the tax is calculated

For certificate applications made on or after January 1, 2020, there is no Estate Administration Tax on an estate valued at $50,000 or less. Above $50,000, the tax is $15 for every $1,000 of estate value, or part of $1,000, with the value rounded up to the nearest thousand.

The tax is tied to the application for a certificate of appointment, which is the court document that confirms who has authority over the estate. Only an estate trustee has legal authority to manage or distribute an estate, including selling the home or clearing it out.

How the home's value counts

A deceased person's property, including the home and its contents, vests in the personal representative, who holds it as trustee. For the tax, Ontario real estate is valued less the encumbrances on it, such as a mortgage, collateral mortgage or lien.

That netting only applies to debts secured against the property. Other debts, such as lines of credit, credit cards and loans, cannot be deducted. Funeral expenses and lawyer's fees cannot be deducted either.

• A mortgage registered on the house reduces the value that counts.
• An unsecured line of credit or credit card balance does not reduce the value.
• Funeral costs and legal fees do not reduce the value.
• The contents of the home are part of the deceased's property, so they form part of the estate.

Ownership setups and the tax

How title was held changes whether the house counts at all. The table below compares common setups.

Be careful before arranging ownership just to reduce tax. Whether a particular joint arrangement works as intended, or can be challenged by family members or dependants, depends on the facts and is worth confirming with a lawyer.

Small estates and filing duties

As of April 1, 2021, an estate valued at $150,000 or less can use the small estate process, which uses Form 74.1A, Application for a Small Estate Certificate. Estates over $50,000 and up to $150,000 still pay the tax.

After the certificate is issued, the estate trustee must file an Estate Information Return within 180 calendar days. If new assets turn up or an estimated value proves wrong, an amended return is due within 60 calendar days.

Failing to file, or making false or misleading statements, can lead to a fine of at least $1,000 and up to twice the tax payable, imprisonment for up to two years, or both. Accurate valuation of the home matters for that reason.

What to do next

• Find out how title to the home was held, and get a copy of the current ownership record.
• List every mortgage, collateral mortgage or lien registered against the home.
• Separate secured debts from unsecured ones, since only secured ones reduce the value.
• Note any other jointly held assets and any property outside Ontario.
• Get an estimate of the home's value and keep the support for it.
• Diarize the 180-day and 60-day return deadlines once a certificate is issued.

If the ownership is mixed, a joint owner is not a spouse, or values are uncertain, speak with a lawyer before applying.

Frequently asked questions