Probate and Real Estate in Ontario: Is Property Included in Estate Value?

If you stand to inherit a house, a cottage or a share in land, you may wonder whether it counts toward probate tax and whether probate is needed before anything can happen. The answer depends on how the property was owned and on what is owing against it.

This article explains the general rules in Ontario. Property questions can turn on the exact wording of the title, so a lawyer should confirm your situation.

Is real estate part of the estate value?

Real estate in Ontario is counted, but it is valued less encumbrances, such as a mortgage, collateral mortgage or lien. Real estate outside Ontario is not included in the value of the estate for Estate Administration Tax.

Unsecured debts such as credit card balances, loans and lines of credit cannot be deducted to reduce the estate's value. Only encumbrances on the real property itself reduce its value.

The property should be valued at fair market value at the date of death, and you should be able to support the value with documents such as an appraiser's opinion.

Mortgages and the family home

A mortgage is subtracted from the value of the Ontario property it is registered against. If you are wondering whether the home being a principal residence changes the calculation, confirm that with a lawyer or accountant, because the valuation rule for real estate is framed around encumbrances.

A spouse who has no interest in the matrimonial home and was living there at the death may stay there rent-free for 60 days.

Joint title and designated owners

Probate is not always required. Assets held jointly or with a designated beneficiary pass according to how they are owned or designated. Ontario guidance also says that if the deceased owned real property, the estate normally has to be probated.

There is an exception for the matrimonial home. If a spouse dies owning it as a joint tenant with someone other than their spouse, the joint tenancy is deemed severed immediately before death. That share therefore forms part of the estate.

For other jointly owned land, such as a cottage held with a sibling, the answer depends on how title is held. A lawyer can read the title and confirm what passes by survivorship and what falls into the estate.

Dealing with land after death

The Land Titles Act generally requires the estate trustee to obtain a certificate of appointment before dealing with land after an owner dies. There is a narrow exception where there is a will: the certificate may be waived if the property was converted by the Ministry and this is the first dealing since conversion. A covenant to indemnify the Land Titles Assurance Fund is still required in that case.

Before probate, the deceased's property vests in the personal representative, who holds it as trustee for the people entitled, subject to the payment of debts. If the personal representative has not dealt with real property within three years of death, it vests in the beneficiaries without a conveyance, unless a caution is registered in the prescribed form.

A sale of real property for distribution only is not valid without the beneficiaries' concurrence, or approval from the Children's Lawyer or the Public Guardian and Trustee.

What to do next

• Get a copy of the title for each property to see how it is held.
• Find out what mortgages, collateral mortgages or liens are registered.
• Separate Ontario property from property outside Ontario.
• Arrange an appraisal as support for the date-of-death value.
• Ask a lawyer whether a certificate of appointment is needed before the land can be transferred or sold.

Frequently asked questions