Unequal Ownership Shares as Tenants in Common in Ontario: How to Document Them

Not every co-purchaser brings the same amount to the table. One person may contribute a larger down payment, or one partner earns significantly more and will carry a greater share of the mortgage. In these situations, a 50/50 ownership split may be unfair — and legally, it does not have to be.

Tenancy in common is the only Ontario co-ownership structure that permits unequal shares. If you want an ownership split that reflects your actual contributions — 60/40, 70/30, or any other ratio — you need to hold as tenants in common and document those shares correctly from day one.

Why Shares Matter More Than People Think

Many co-buyers focus on the purchase and the mortgage without thinking about what "ownership" actually means for:

• Proceeds of sale: When you sell, each co-owner receives their proportionate share of the net proceeds. A 50/50 split when one person contributed 70% of the down payment means the smaller contributor walks away with more than they put in.
• Tax reporting: Capital gains on the sale of an investment property are reported proportionate to ownership share. CRA expects this to match the actual economic reality, not just what title says if the parties intended something different.
• Estate: On death, the deceased co-owner's share passes through their estate. A documented 60% share means 60% goes to their beneficiaries.
• Mortgage default: If one co-owner defaults, the lender's remedies run against the whole property — but co-ownership agreements can address internal recourse between owners based on their ownership percentages.

Joint Tenancy Cannot Have Unequal Shares

Before going further: joint tenancy requires equal shares. It is a legal requirement that all joint tenants have identical interests. If you want an ownership split that is anything other than equal, you cannot use joint tenancy. You must hold as tenants in common.

This means the automatic right of survivorship — where the survivor inherits the other's share — is not available. Each co-owner's share passes through their estate, not automatically to the other.

How to Establish Unequal Shares

1. Reflect Them in the Transfer Document

When the property is purchased, the transfer document (registered at the Ontario land registry) can state the precise ownership percentages. For example: "Jane Smith, as to 65%, and Michael Brown, as to 35%, as tenants in common."

This is the cleanest approach and the starting point for all legal and tax purposes. If the transfer document reflects the true economic split, the registry record is accurate from the outset.

2. A Declaration of Trust / Co-Ownership Agreement

A private written agreement between the co-owners — signed at or before closing — can record:

• The precise ownership percentages and what they were based on (e.g., respective down payment contributions).
• How ongoing costs are shared (proportionate to ownership, or otherwise).
• What happens on sale, death, or one owner wanting to exit.
• Buyout valuation mechanics.

This document is essential even when the percentages are also on title. It provides context, governs the relationship during ownership, and reduces future disputes.

3. Documenting the Contributions

Keep a clear record of who paid what:

• Down payment source: bank statements showing the transfer from each party.
• Closing cost contributions.
• An ongoing log of mortgage payments if not proportionate to ownership.

If the ownership split is later challenged — by a creditor, by a separated spouse, or by the CRA — contemporaneous financial records are your strongest evidence.

What If the Title Says 50/50 but the Contributions Were Unequal?

This is one of the most common disputes in property co-ownership. A resulting trust may arise in favour of the person who contributed more, entitling them to a larger beneficial share even if the registered title says otherwise.

Proving a resulting trust requires evidence of the intent at the time of purchase and the actual financial contributions. Courts look at the circumstances — did the parties discuss an unequal split? Did they treat the property as having unequal ownership in how they managed it?

The better path is to never let this question arise. Document the split clearly at the time of purchase.

Tax Implications of Ownership Percentages

Income Tax (Rental Properties)

Rental income from a co-owned property is reported by each co-owner in proportion to their ownership share. If the title says 65/35 but you always split rental income 50/50, there is a disconnect that may need to be explained to CRA. Consistency between the legal/beneficial ownership split and the tax reporting is important.

Capital Gains on Sale

When a co-owned property is sold, the capital gain (or loss) is allocated to each owner proportionate to their interest. Each owner reports their share on their own tax return.

Land Transfer Tax on Unequal Transfers

Land transfer tax is calculated on the value of the interest being transferred. If the split is 65/35, the 35% co-purchaser is acquiring a 35% interest and tax is calculated accordingly. The total tax across both acquisitions equals what would be paid on the whole property.

Frequently asked questions