Is Real Estate Included in Estate Administration Tax in Ontario?

For many estates the family home is the largest asset, so how it is counted matters. If you are the executor, you will want to know whether the house is included and whether the mortgage reduces the tax.

This article explains how real estate fits into the Estate Administration Tax calculation in Ontario, and which situations work differently.

Is the house part of the estate's value?

Generally yes. The estate's value includes Ontario real estate, valued at its appraised value on the date of death, less encumbrances such as mortgages or liens.

The application form asks for the total value of real property, the total value of personal property and the total estate value.

The tax is charged only when an estate certificate (probate) is applied for and issued. If no certificate is applied for or issued, no tax is owed. The tax is paid as a deposit when the application is filed, 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.

How the tax is worked out

For estate certificates applied for on or after January 1, 2020, no tax is payable on an estate worth $50,000 or less. Above $50,000, the tax is $15 for every $1,000 (or part thereof) of the estate's value over $50,000. To calculate the tax, the estate's value is rounded up to the nearest thousand dollars.

Applications made before January 1, 2020 used older rates: $5 per $1,000 (or part thereof) on the first $50,000 and $15 per $1,000 on the amount above $50,000.

Since April 1, 2021, a small estate for probate purposes is one valued at $150,000 or less. Small estates still pay the tax on value over $50,000, up to the $150,000 cap.

How the house is valued

Real property is valued at its appraised value at the date of death, even if it sells for more or less shortly after the death. Assets generally are valued at fair market value at the time of death.

You must be able to back up values with supporting documents, such as statements or an appraiser's opinion of value. Getting a written appraisal as of the date of death is a practical step.

Can the mortgage be deducted?

Yes, for Ontario real property. A mortgage, collateral mortgage or lien registered against real property that is part of the estate can be deducted from that property's value. Only encumbrances on real property can be deducted.

An unregistered loan or a line of credit does not reduce the estate's value. The same is true of funeral expenses, lawyer's fees, loans and interest, vehicle debt, credit card debt and real estate commissions.

When real estate is left out or treated differently

When a joint tenant dies, the surviving co-owners inherit the deceased's share. How the home was owned is therefore important, and the title documents will show it.

Other rules can also change the total. If the court issues a certificate limited to the assets in a specific will, only the assets in that will count toward the estate's value. Assets the deceased no longer owned at death, such as insurance paid to a named beneficiary, are left out.

What to do next

• Get a copy of the property's title to see how it was owned and whether a mortgage or lien is registered.
• Obtain an appraisal showing value at the date of death.
• Collect mortgage statements as of the date of death.
• Ask a lawyer or accountant if the ownership or any registration is unclear.

After the certificate is issued, the estate representative must file an Estate Information Return with the Ministry of Finance within 180 calendar days. The return is still required even when the estate is worth $50,000 or less and no tax is owed. The records supporting the return must be kept for four years at the estate representative's principal place of business or residence.

Frequently asked questions