Buying Property With Family
Parents on title, co-owning with siblings, gifts and loans: the tax effect of family property purchases and what to write down.
The short version
- When family members buy property together, each owner reports their share of any rental income and any gain on sale. Who's on title matters, but who actually owns it (who paid, and what you agreed) matters more.
- Each owner's share of a home is covered by the principal residence exemption only if that owner's family unit lives there and designates it. A parent who co-owns their adult child's home usually pays tax on their share of the gain.
- A parent on title just to help with the mortgage, holding it for the child, may be a bare trust: no tax change, but possible trust reporting in future years.
- Gifts to adult children are tax-free to give and to receive. Gifting property (rather than cash) is a deemed sale at market value.
- First-time buyer programs (FHSA, Home Buyers' Plan, the home buyers' amount, land transfer tax refunds) are usually per person, and a co-owner who isn't a first-time buyer can reduce them.
Buying Property With Family
With prices where they are, a lot of first homes in Canada are family projects: parents on the mortgage, siblings splitting a duplex, a couple and a parent pooling money for a house with a suite. These arrangements can work well. They also create tax questions nobody thinks to ask at the lawyer's office, and the answers show up years later, usually on a sale or a death. Here's what to settle before you sign.
Common Setups and Their Tax Effect
| Arrangement | Tax effect |
|---|---|
| Parents gift cash for the down payment; the child owns the home | No tax for anyone. The home is the child's principal residence |
| Parents lend the money (documented loan) | No tax on the loan; interest, if any, is income to the parents. Protects the money in a separation |
| Parent on title only to qualify for the mortgage, holding for the child | Often a bare trust: the child is the beneficial owner, and the gain is the child's (usually exempt) |
| Parent co-owns as a real investment (say 50%) | The parent's share is not their principal residence: taxable capital gain on their share when sold |
| Siblings or friends co-own and both live there | Each owner's share can be their principal residence |
| Family buys a duplex: one unit lived in, one rented | Each owner reports their share of rent and expenses; exemption applies only to the share each owner lives in |
How should we set up the family purchase?
Describe who is paying what, who will live there and whose names will be on title. The assistant explains the tax effect of each option, the reporting, and what to put in writing.
Title vs Beneficial Ownership
The names on title say who legally owns the property. For tax, CRA looks at who beneficially owns it: who paid, who carries the costs, who gets the proceeds. A parent added to title "just for the bank" who never paid and has no right to the proceeds may hold their share in trust for the child. Write that down in a short agreement signed when you buy. Without it, CRA, a court, or a family member may decide otherwise later.
Bare trusts were brought into the trust reporting rules in 2023, but CRA waived the filing for 2023, 2024 and 2025 and said some bare trusts may have to file for 2026 and later years. If a parent holds title for a child, check the current rules each year.
The Parent Co-Owner's Tax Bill
A parent who truly owns half of a child's home and lives elsewhere can't use the principal residence exemption on that half for years their own home is designated. Example: a $600,000 home sells for $900,000 ten years later. The child's half of the gain ($150,000) is tax-free; the parent's half ($150,000) is a capital gain, with $75,000 added to the parent's income. Planning that in advance (as a loan or a gift instead of ownership) usually costs less. More on the exemption: the principal residence exemption.
Gifts, Loans and Attribution
- Cash gifts to adult children: no gift tax, no income tax, no reporting.
- Gifting property: giving a cottage or rental to a child is a deemed sale at market value; see cottage capital gains.
- Spouses: if one spouse provides all the money for a rental, the attribution rules can tax all the rental income and gains to that spouse, whatever the title says.
- Minor children: income from property given to them can be attributed back to the parent (capital gains generally aren't).
Transferring a property you already own to a child is a different question; see gifting property to children.
Sold a home or cottage? Keep the most gain tax-free
The home and cottage SmartFile picks the best split of years between your properties and fills in Form T2091(IND).
First-Time Buyer Programs With Co-Owners
- FHSA and the Home Buyers' Plan: each qualifying first-time buyer can use their own, up to their own limit. A co-owner parent usually isn't a first-time buyer and can't.
- Home buyers' amount: up to $10,000 per home, shared between qualifying buyers.
- Ontario land transfer tax refund for first-time buyers: available only to the qualifying buyers, and can be reduced when a co-buyer doesn't qualify.
- GST/HST new housing rebates on a new home: generally require the buyer or a relation to live there, and can be affected by who is on title. Ontario details are on OntarioHSTRebates.ca.
What to Put in Writing
- Each person's ownership share and what they contributed.
- Whether anyone holds title in trust for someone else.
- Whether money from parents is a gift or a loan, and the repayment terms.
- Who pays the mortgage, taxes and repairs, and who gets rent if part is rented.
- What happens on a sale, a death, a separation, or one owner wanting out.
A real estate lawyer can turn that into a co-ownership agreement for much less than the cost of a dispute. Rental reporting for co-owners is on rental income tax.
When co-owned property is eventually sold or inherited, see selling your home and inheriting a house.
Buying With Family Questions
Is there tax if my parents give me money for a down payment?
No. Canada has no gift tax, and cash gifts to adult children are not taxable income to the child or the parent.
Does my parent pay tax if they co-own my house?
If your parent truly owns a share and does not live there, their share is generally not covered by the principal residence exemption, so they report a capital gain on that share when the home is sold.
What if my parent is on title only to help with the mortgage?
If they hold their share in trust for you and have no real ownership, it may be a bare trust. The home’s gain is then yours, and usually exempt. Document the arrangement in writing.
Do bare trusts have to file a T3 return?
CRA did not require bare trusts to file T3 returns for 2023, 2024 or 2025, but has said some may have to file for 2026 and later. Check the rules for the current year.
Can co-owners each use the FHSA and Home Buyers’ Plan?
Each co-owner who qualifies as a first-time home buyer can use their own FHSA and Home Buyers’ Plan for the same home.
How is a rental property bought with my spouse taxed?
Rental income and gains are generally split according to what each spouse contributed to buy it, not just whose name is on title. If one spouse put up all the money, the attribution rules can tax all the income to that spouse.
Sources: CRA, Important updates to the trust reporting requirements for 2025; Income Tax Folio S1-F3-C2, Principal Residence; Guide T4037 Capital Gains. Checked October 2026. Whether a parent on title is a bare trustee depends on the facts and documents. Ontario land transfer tax refund rules for mixed buyers are summarized.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.