Adding Someone to Title as a Joint Tenant
Posted on September 29, 2022 by Nat Olsson in Featured, Real Estate
If you want to add someone to title as a joint tenant to avoid probate fees, or otherwise, you should keep the following in mind:
Creation of the joint tenancy could interfere with your estate plan: title to the property will pass outside of probate, and this might conflict with the intentions expressed in your existing will. It could also lead some of your beneficiaries to bring a claim against the estate if they feel they are not getting their fair share, because, without clear additional proof of your intentions, the person who goes on title with you can be deemed by the court to be holding the property on behalf of your estate, rather than a gift recipient who obtains the property outright upon your death.
The person you add to title may have capital gain tax issues upon sale of the property, starting at the date of their addition to title, unless you specify via a document called a Bare Trust Deed that you retain the beneficial ownership of the property, and the gift occurs only upon your death. The transferee can show this document to CRA to prove that they had no taxable interest in the property until your death.
There is Property Transfer Tax payable by the transferee for adding someone as a joint tenant, as it is a transfer of an interest in land. There are exemptions from the PTT for transfers of principal residences to immediate family members and their spouses, and some other limited exemptions.
The transferor exposes their property to the transferee’s outstanding debts to creditors, who can file charges against the property that potentially interfere with your ability to sell the property. Separating spouses can also tie up the transferee’s interest or recover their spousal share of that interest—you could end up being on title with your child and their ex-spouse, in other words.
If you have implemented a land tax deferment on your property, you will need to pay out the amount owing before you can add anyone other than your spouse to title, and then you can re-request deferment of property taxes afterward.
If they wish, a joint tenant can also sever the tenancy secretly by transferring their interest to themselves, converting it to a tenancy in common that they can dispose of via will or sell or give to another person, potentially frustrating the purpose of the estate plan or other arrangement you are attempting with the title change.