Adding Yourself to Your Aging Parent’s Home: Tax and Probate Risks Canadians Should Know

As parents age, many Canadian families look for ways to simplify estate planning. One common idea is adding an adult child to the title of the parent’s home.

While this may seem straightforward, adding a child to a parent’s home can trigger unexpected tax and probate issues if not done properly. What’s meant to save time or money can sometimes lead to higher taxes, loss of control, and family disputes.

Why Families Add a Child to a Parent’s Home Title

Parents often consider this strategy to:

• Avoid probate fees

• Simplify estate administration

• Help with caregiving or decision-making

• Ensure the home stays in the family

Despite good intentions, the tax and legal consequences are often misunderstood.

Tax Implications of Adding Yourself to Title

Capital Gains Tax May Be Triggered

From the Canada Revenue Agency’s perspective, adding a child to title can be treated as a partial transfer of ownership, even if no money changes hands.

This can result in:

• A deemed disposition of part of the home

• Capital gains tax becoming payable earlier than expected

Principal Residence Exemption Risks

Canada’s principal residence exemption can shelter gains on a main home. However, once a child becomes an owner:

• The exemption may no longer fully apply

• The child’s portion of the home may become taxable

• Future increases in value could trigger capital gains tax

This is especially important if the child already owns another home.

Bare Trusts and CRA Reporting

In some situations, a child is added to title for estate planning purposes only, without transferring true ownership. This may involve a bare trust arrangement.

However:

• The structure must be properly documented

• New bare trust reporting requirements may apply

• Penalties can apply if filings are missed

Probate and Legal Risks of Adding a Child to Title

Loss of Control and Forced Sale Risk

Once a child is added as a co-owner, the parent may need the child’s consent to sell or refinance the home. In some cases, a co-owner can even apply to force the sale of the property.

Additionally, the home may be exposed to:

• The child’s creditors

• Divorce or separation claims

• Legal disputes with other family members

Probate Savings vs. Long-Term Risk

Avoiding probate is a common motivation, but probate fees are often not significant compared to the potential tax, legal, and family risks. Poor planning can cost far more than probate ever would.

Final Thoughts

Adding yourself to your aging parent’s home may seem like an easy estate planning step, but it can result in unexpected taxes, legal exposure, and family conflict if done casually.

Before changing title, families should understand the tax implications and seek professional personal tax planning advice tailored to their situation.

👉 Speak with a tax accountant and tax lawyer before making changes to property ownership.