Right of Survivorship vs Tenants in Common When an Owner Dies

If you own a home with someone else, a death raises a practical question: what happens to the deceased owner's share? The answer depends heavily on how the two of you hold title. Two phrases come up again and again, right of survivorship (often called joint tenancy) and tenants in common.

This article explains in plain terms why the difference matters, what the estate trustee does, and what to think about for tax and day-to-day matters. Because the outcome depends on the title document and the circumstances, treat this as a guide to the right questions and confirm the details with a lawyer.

The basic difference in plain words

What each way of holding title means for a deceased owner's share depends on the wording of the title, so it is worth confirming rather than assuming.

Many couples assume their home is held one way when the title says something different. Co-owners who are not spouses, such as siblings, a parent and adult child, or friends, are especially likely to be surprised.

Why the estate trustee still matters

Whether or not there is an estate to deal with depends on the facts, and a lawyer can confirm this for you. An estate trustee who agrees to act is responsible for winding up the deceased's affairs and paying taxes, bills and debts. They collect the assets and distribute what remains.

Some assets go to a named person instead of through the will. Ontario's guidance gives examples such as an insurance policy or a joint bank account, where a designated beneficiary receives certain assets or funds after death. How this applies to a home you own with someone else depends on your situation, so it is worth confirming with a lawyer.

Tax points to raise early

A home can qualify as a principal residence for a year if it is owned, alone or jointly, is lived in during the year by the owner, a spouse or common-law partner, or a child, and is designated. A family can designate only one home per year, from 1982 on. The land usually counts up to half a hectare.

The CRA allows the exemption only if the sale and designation are reported on Schedule 3 with Form T2091(IND). The legal representative of a deceased person uses Form T1255 to designate the deceased's property as a principal residence. Years that are not designated have their gain reported.

If the home is sold soon after it was acquired, a separate rule applies. A home sold within 365 consecutive days of acquisition can be taxed as business income under the flipped-property rule, but there is an exception where the sale was due to a qualifying life event such as the death of the taxpayer or a related person. How these rules apply to a surviving owner or an heir who later sells depends on the facts, so ask an accountant or lawyer.

Questions to sort out as co-owners

• How does the title actually read? Do not rely on memory or assumptions.
• Does the home have a mortgage, and who is responsible for it after a death?
• Did you ever sign a co-ownership or cohabitation agreement that deals with a death?
• Are there children from other relationships who may expect a share?
• Is the home the only asset, or are there other assets that can balance things out?
• Who has been paying for the home, and might that matter to the other family members?

If you are thinking about changing how title is held, that is a legal step with consequences for the family, and it is worth getting advice first.

What to do next

• Get a copy of the current title or deed and read how the owners are described.
• Locate any wills, the mortgage documents and insurance policies.
• Find out who the estate trustee is, and ask a lawyer what steps are needed for them to act.
• Ask an accountant whether a principal residence designation or other tax filing will be needed.
• Avoid selling, refinancing or moving out of the home until you know where title stands.
• Speak to an estates or real estate lawyer to confirm the effect of the title and the steps to follow.

Frequently asked questions