It has been a common estate planning strategy to add a child’s name to a parent’s property as a “joint tenant”. This has been done to reduce the delays and costs associated with probate of a parent’s estate.
Typically, the child has signed a document to confirm that the parent is still the real owner of the property and that they hold their interest “in trust” for their parent until their parent dies. At that time, the child may become the owner outright, or may then hold the property in trust for some or all of the beneficiaries of the parent’s estate.
The Government of Canada has introduced an underused housing tax that requires reporting of these situations beginning in the 2023 tax year.
While for most people there will be no tax to be paid, the child in the above circumstances must file a tax return related to that ownership each year. There are penalties for failing to file these returns even if no tax is payable.
If you find that you are in this position, you should reach out to us and/or your accountant to ensure that you comply.
Disclaimer: This is not legal advice