When it comes to owning a home, the title is more than just a piece of paper—it’s a legal document that defines who has ownership rights. For many Canadians in Ontario and Alberta, adding a family member to a home title is a tempting idea, whether to help with a mortgage, plan for the future, or avoid probate fees. But as simple as it sounds, this decision carries significant legal, financial, and tax consequences. In this guide, we’ll walk you through the process, highlight the risks and benefits, and show you why professional advice is a must. Let’s dive in with a real-life scenario to bring it all to life.
A Real-Life Scenario: Jane’s Story
Meet Jane, a 60-year-old homeowner in Ontario. Jane bought her home 20 years ago, and it’s now worth $800,000—quite a jump from the $300,000 she paid. With her son, Mark, struggling to buy his own place in today’s market, Jane decides to add him to her home’s title. Her goals? Help Mark qualify for a mortgage down the road and bypass probate fees when she passes away. It seems like a win-win—until Jane learns the hidden costs.
What Does Adding a Name to a Home Title Mean?
In both Ontario and Alberta, adding someone to your home title means transferring a legal ownership interest to them. They become co-owners with rights to the property, and this isn’t something you can undo on a whim. The process involves filing paperwork with the local land registry office—electronically in Ontario via the Land Registry Office and similarly in Alberta through the Land Titles system. But beyond the paperwork, you’re opening the door to a range of implications.
Types of Ownership
When adding a name, you’ll need to choose how the property will be co-owned:
- Joint Tenancy: Common for spouses, this means equal ownership and the “right of survivorship.” If one owner dies, the property automatically passes to the other(s), bypassing the estate.
- Tenants in Common: Here, ownership can be split unevenly (e.g., 75% to one person, 25% to another), and there’s no automatic transfer upon death—the deceased’s share goes to their estate.
For Jane, joint tenancy with Mark sounds appealing to avoid probate, but she’s about to discover it’s not that simple.
Why Add a Family Member to Your Title?
People consider this move for several reasons:
- Mortgage Help: A co-owner’s income might improve loan eligibility.
- Estate Planning: Joint tenancy can skip probate, saving fees (around 1.5% of the estate value in Ontario and Alberta).
- Gifting: Some want to share ownership with a spouse or child as a gesture or investment.
Jane’s case blends two motives: helping Mark and dodging probate. But as she digs deeper, the risks start piling up.
The Risks You Need to Watch For
Adding a name isn’t just a paperwork shuffle—it’s a legal shift that can ripple through your finances and family. Here’s what Jane (and you) should consider:
1. Capital Gains Tax
In Canada, selling a property triggers capital gains tax on 50% of the profit, unless it’s your principal residence. Jane’s home qualifies for this exemption since she’s lived there the whole time. But if she adds Mark—who doesn’t live there—part of the home loses that exemption. When it’s sold, Mark’s share could face a hefty tax bill based on the $500,000 gain. In Alberta and Ontario, this could mean tens of thousands of dollars, depending on his tax bracket.
2. Creditors and Divorce
Once Mark’s name is on the title, his financial troubles become Jane’s problem. If Mark goes bankrupt or faces a divorce, creditors or his ex-spouse could target the home’s equity. Imagine Jane’s shock when a creditor demands to sell her house to settle Mark’s debts!
3. Loss of Control
As a co-owner, Mark must agree to any sale or mortgage changes. If Jane wants to downsize in retirement but Mark refuses, she’s stuck. In Alberta and Ontario, all owners must sign off on major decisions—Jane’s dream of full control vanishes.
4. Probate vs. Other Costs
Jane hoped to avoid probate fees (about $12,000 on an $800,000 estate), but the tax hit from adding Mark could dwarf that savings. Plus, if Mark takes out a loan using the home as collateral, sale proceeds might go to his lender first.
5. Insurance Complications
Jane didn’t think to tell her insurer about the title change. If a fire damages her home and the policy is voided for not disclosing Mark’s ownership, she’s left footing the repair bill.
How to Add a Name to a Home Title: Step-by-Step
Despite the risks, Jane’s determined to explore her options. Here’s the process in Ontario and Alberta:
Step 1: Assess the Implications
Jane meets with a real estate lawyer and accountant to weigh taxes (capital gains, land transfer tax) and legal risks (creditors, control). At Deeded, we can help assess the situation and get started on the process.
Step 2: Choose Ownership Type
Jane opts for joint tenancy with Mark for now, but her lawyer explains tenants in common might better protect her estate plans.
Step 3: Hire Professionals
- Lawyer: Conducts a title search to check for liens or mortgages, then drafts a transfer agreement (Form 1 in Ontario, Transfer of Land in Alberta).
- Spousal Consent: If Jane were married, her spouse would need to sign off (not an issue here).
Step 4: File the Transfer
The real estate lawyer electronically registers the transfer with the Ontario Land Registry or Alberta Land Titles Office. Fees apply—around $100-$200, plus legal costs.
Step 5: Notify Key Parties
Jane informs her mortgage lender (who must approve) and updates her home insurance to include Mark.
Step 6: Plan for Taxes
Her accountant confirms no immediate land transfer tax since it’s a gift to a family member, but warns of future capital gains exposure.
Ontario vs. Alberta: Key Differences
While the process is similar, a few distinctions stand out:
- Land Transfer Tax: Ontario charges this on most transfers (exempt for family gifts under certain conditions), while Alberta doesn’t have a provincial land transfer tax—just registration fees.
- Probate Fees: Both provinces charge about 1.5% of the estate value, making joint tenancy a popular workaround.
- Common-Law Rules: In Ontario, common-law spouses have fewer automatic property rights than married ones, unlike Alberta, where the Adult Interdependent Relationships Act might apply.
Jane’s in Ontario, so she’s relieved there’s no immediate tax hit—but the capital gains risk looms large.
The Bottom Line
Adding a family member to your home title in Ontario or Alberta isn’t a quick fix—it’s a major decision with lasting impact. Whether you’re helping a loved one or planning your estate, weigh these factors:
- Get Expert Advice: A real estate lawyer and accountant can tailor a solution to your goals.
- Understand Ownership: Joint tenancy vs. tenants in common changes everything.
- Plan for Taxes: Capital gains can blindside you if you’re not careful.
At Deeded, we simplify real estate transactions with expert guidance. Thinking of tweaking your title? Contact us today to connect with professionals who’ll ensure your move is smart, safe, and stress-free—because your home deserves more than a hasty decision.
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