Can I Put My Child on My Property Title in British Columbia?

Many parents think about adding an adult child to the title of the family home. The reasons vary: avoiding paperwork later, helping the child qualify for a mortgage, or keeping the home in the family. It looks like a simple form, but it gives your child an ownership interest in the property.

This article explains how co-ownership works in British Columbia and the main risks: loss of control, your child's creditors, your child's separation, and tax. It is general information, not advice on your situation. Whether your mortgage lender must agree to a title change is a matter of your mortgage contract, so check it.

This article covers the law of British Columbia.

Two ways to hold title with your child

Where land is transferred to two or more persons, they are tenants in common unless the transfer document shows a contrary intention. If the shares are not stated, they are presumed to be equal. A true joint tenancy needs identical interests, and when one joint tenant dies, the right of survivorship passes the interest to the survivor.

A joint tenant can transfer their interest to themselves, which has the same effect of severing the joint tenancy as a transfer to a stranger and turns that share into a tenancy in common. Also, if a person holds their interest as a trustee, a true joint tenancy is not established.

Risks of sharing ownership

Once your child is on title, they are an owner, not a helper. Think through each of these points before signing.

• Loss of control. Joint tenants and tenants in common may be compelled to partition or sell the land, and if interested parties holding at least half the property request a sale, the court must order it unless it sees good reason to the contrary.
• Your child's debts. A mortgage by one joint tenant of their own interest and an assignment in bankruptcy are both severing events. A judgment registered against one joint tenant does not sever the joint tenancy, and if the debtor dies the survivor takes free of the judgment. How a particular creditor could reach the home depends on the facts, so ask a lawyer.
• Your child's separation. Family property includes property owned by at least one spouse and a beneficial interest of at least one spouse in property, and on separation each spouse has a right to an undivided half interest in all family property as a tenant in common. The Supreme Court may order an unequal division if equal division would be significantly unfair, considering factors such as the duration of the relationship. A gift to a spouse from a third party is excluded property, but the spouse must demonstrate it and the increase in value is family property. A court must not divide excluded property unless it would be significantly unfair not to divide it. Whether your child's share is a gift is a question of fact.
• Survivorship. In a joint tenancy your child takes your interest on your death by survivorship. That can cut across what your will says and may not be what you want for your other children.

Co-owners can also fall out over money. A co-owner who has paid more than their share may apply to the Supreme Court for relief, and one co-owner can bring an action of account against another.

Property transfer tax when you add a child

A transfer to a child may be eligible for the principal residence exemption (code 05). The transferee must be a related individual of the transferor and a Canadian citizen or permanent resident, and the property must usually have been a principal residence for a continuous period of at least six months immediately before the transfer, although this period can vary, so confirm it for your situation. A child is a related individual, but a sibling is not.

There are limits. Land over 0.5 hectares (1.24 acres), or land not classified residential, is not fully exempt, and a partial-exemption formula applies to the rest. When someone is added to title, an exemption is claimed only on the part of the interest coming from related individuals, and tax is payable on any interest acquired from an unrelated owner. Where title is held in joint tenancy and one owner transfers an interest, eligibility is assessed on the partial interest actually transferred.

Income tax: a gift is not tax-free by default

For federal income tax, a gift of capital property is treated as a sale at fair market value on the date of the gift, with any gain or loss reported for that year. Unlike a gift to a spouse or common-law partner, there is no general rollover for a gift to a child; only farm or fishing property transfers to a child, spouse or spousal trust may postpone gain.

So gifting a home to a child is a deemed sale at fair market value. If you sold or were considered to have sold property that was ever your principal residence, you report it on Schedule 3 and Form T2091(IND). How this applies to a gift of a part interest in your home depends on your situation, so it is worth confirming with an accountant.

What to do next

• Decide what you want: help with a mortgage, simpler estate planning, or something else.
• Ask whether a will or other planning achieves the goal without giving up ownership now.
• Read your mortgage terms and ask your lender about title changes.
• Consider your child's finances and relationship status honestly.
• Ask an accountant about income tax and property transfer tax for your exact property.
• See a lawyer before signing any transfer, so the way title is held matches your intentions.

Frequently asked questions