Is a Jointly Owned Home Subject to Estate Administration Tax in Ontario?

If you own a home with a spouse or another person, you may wonder whether the home will be taxed when one owner dies. The answer depends on how title is held.

This article explains the difference between joint tenancy and tenancy in common for Ontario's Estate Administration Tax. A lawyer can confirm how your own title is held.

How the tax is worked out

The tax applies only when a probate certificate is applied for and issued. For applications made on or after January 1, 2020, there is no tax on an estate worth $50,000 or less, and above that the rate is $15 for every $1,000 (or part) over $50,000. The estate's value is rounded up to the nearest thousand dollars first.

The tax is paid as a deposit when the probate application is filed with the court, and once the certificate is issued the deposit becomes the Estate Administration Tax. It is paid by the estate, not personally by the estate representative. Applications made before January 1, 2020 used older rates: $5 per $1,000 (or part) on the first $50,000 and $15 per $1,000 above that, with estates of $1,000 or less exempt.

Because the tax is based on the estate's value, the key question for a shared home is whether it counts as part of the estate at all. That depends on how the owners hold title.

Home held as joint tenants with survivorship

When a joint tenant dies, the surviving co-owners inherit the deceased's share of the property. Jointly owned assets that pass automatically to the surviving owner or owners are left out of the estate's value.

In practice, this means a home held this way generally does not add to the tax for the first owner's estate. Whether title really is held with survivorship is something to confirm from the ownership documents.

Home held as tenants in common

Tenants in common are different. When one dies, their share does not pass automatically to the other owners. It becomes part of their estate, so it counts toward the estate's value if probate is sought.

Ontario real estate is valued at its appraised value on the date of death, less encumbrances such as mortgages or liens. It is valued at that date even if it sells for more or less shortly after the death. A mortgage or lien registered against the property can be deducted from that property's value.

Other points to keep in mind

• Only encumbrances on real property can be deducted. Funeral costs, credit card debt and lawyer's fees cannot.
• Estate representatives must be able to support the value with documents, such as an appraiser's opinion of value.
• If the home is outside Ontario, it is left out of the estate's value.
• Insurance paid to a named beneficiary is left out, because the deceased no longer owned it at death.
• RRSPs, RRIFs and TFSAs with a beneficiary designation are left out, but those whose beneficiary is the estate are included.
• Bank accounts, investments, vehicles and business interests are among the other property that is included.

Other assets may still lead to probate being needed. If so, the tax is based on the estate's value without the jointly held property that passes by survivorship.

Since April 1, 2021, a small estate for probate purposes is one valued at $150,000 or less, and the application uses Form 74.1A, filed with Form 74.1B and a draft Small Estate Certificate (Form 74.1C). Small estates still pay tax on the value over $50,000, up to the $150,000 cap.

After the certificate is issued

If probate is granted, the estate representative must file an Estate Information Return with the Ministry of Finance within 180 calendar days after the certificate is issued. This is required even when the estate is worth $50,000 or less and no tax is owed. If a deadline falls on a weekend or holiday, it moves to the next business day.

• Filing the return online is recommended, and it can also be filed by mail, courier, fax or in person.
• The records supporting the return must be kept for four years.
• If information in a filed return is incorrect or incomplete, an amended return must be filed within 60 days of becoming aware of it, within four years of the certificate being issued.
• The Ministry of Finance may assess or reassess the tax within four years after the day it was due, but with no time limit if a return was late or a misrepresentation was made.

Failing to file the return, or making false or misleading statements, can lead to a fine of at least $1,000 and up to twice the tax payable, imprisonment of up to two years, or both. How all of this applies to your estate depends on the facts, so it is worth confirming with a lawyer.

What to do next

• Get a copy of the property's title and review how ownership is described.
• Obtain an appraisal of the home as of the date of death.
• Collect mortgage statements for any registered mortgage or lien.
• Ask a lawyer how the home should be dealt with and whether probate is needed.
• If probate is needed, be ready to give the total value of real property, personal property and the whole estate on Form 74A.
• Keep supporting documents, since values must be backed up.

Frequently asked questions