Is the Family Home Included in Ontario Estate Administration Tax?

If you are inheriting a house, one of the first surprises can be that the home is often the biggest piece of the estate, and it can drive the Estate Administration Tax. The tax is based on the value of what the person owned at death, not on what you personally receive.

This article explains how a family home is counted, how a mortgage changes the number, and what is not counted at all. Your own facts, such as how the home was owned, can change the result, so treat this as a starting point.

How the tax works in short

Estate Administration Tax is payable by the estate to the Crown in right of Ontario immediately upon the issuance of an estate certificate. An estate certificate includes a certificate of appointment of estate trustee, and that includes a small estate certificate.

For applications made on or after January 1, 2020, an estate valued at $50,000 or less is exempt. Above that, the tax is $15 for each $1,000, or part of $1,000, of the value over $50,000. Ontario also says values are rounded up to the nearest $1,000 before the calculation.

The tax is paid by the estate, not by the estate trustee personally, and the trustee is liable only in a representative capacity.

Is the house counted, and at what value?

Yes, in most cases. Ontario lists Ontario real estate among the assets included in the value of the estate, less encumbrances such as mortgages or liens, using the appraised value at the date of death. Value is fair market value at the date of death, supported by documents such as appraisals.

So the number that matters is not what the family paid for the home, and not what it later sells for. It is the value at the date of death, backed up by paperwork. In practice, that usually means getting an appraisal and keeping it with the estate records.

The estate value is built from the total property the deceased owned at death, as sworn or affirmed to the court registrar before a grant is issued.

How a mortgage changes the number

The estate value is the disclosed value less the actual value of encumbrances on real property. A mortgage or lien registered against the house reduces the value counted.

For example, imagine a home with a registered mortgage and nothing else in the estate, where the appraised value less the mortgage works out to $250,000. The tax on a $250,000 estate is $3,000. If the same home had no mortgage and the estate were $500,000, the tax would be $6,750.

Only encumbrances on real property count. Ontario says funeral expenses, lawyer fees, loans and interest, vehicle debt, credit card debt, real estate commissions, unregistered loans and lines of credit cannot be deducted. That means an unregistered line of credit does not lower the number, even though it is a real debt of the estate.

When the home may not be counted

Ontario's list of excluded assets includes assets owned before death but not at death, jointly owned assets that pass automatically to the other owner or owners, and real estate outside Ontario. A home sold before death, a home held jointly with a surviving spouse that passed to them directly, or a cottage in another province or country may therefore fall outside the calculation.

Whether a particular home really passed automatically to a co-owner can depend on how title was held and on the facts. If ownership is unclear or disputed, it is worth confirming with a lawyer before you file.

What to do next

The tax is calculated and paid when the application is filed with the Superior Court of Justice, unless no tax is payable or a court orders deferral. If the exact value is not yet known, an estimate can be used for the deposit, and the deposit is credited against the tax. Where an estimate was used, the applicant gives an undertaking to file a sworn statement of the actual value and pay any shortfall within six months.

• Get an appraisal of the home as of the date of death and keep a copy.
• Get a current mortgage or lien statement showing what is registered against the property.
• List every other asset the deceased owned at death, since the home is only part of the total.
• Note whether any property was held jointly or is outside Ontario, and confirm how it passes.
• Ask the court office about accepted payment methods before you attend.
• Diarize the Estate Information Return, which is due within 180 calendar days after the certificate is issued, even if the value is $0.

If the estate is large, the house is only partly paid off, or family members disagree about value, speaking with an estates lawyer or accountant can help you avoid errors that may need to be corrected later.

Frequently asked questions