Before you ask how to transfer the title of your home from parent to child, you should also ask if it’s a good strategy for you and your family first.
As a parent, you are continually planning out the future of your children and your most significant investment to be your real estate or home. You probably want to give your children a boost by completing a title transfer of your home to them.
However, it is imperative for you to understand the whole process and some of the necessary precautions you should take to ensure a smooth real estate title transfer in Ontario.
The Difference Between Gifting and Inheritance
In Ontario, there are no gift tax requirements. However, if the gift involves capital property like a real estate, you will be deemed as having sold the property at fair market value, and you will have to pay some capital tax.
On the other hand, inheritances are not taxed on your federal return, but any income that is generated from the inheritance, such as shares or bonds, is taxed.
Understanding and Using the Quitclaim Deed
If you are transferring the real estate to your children, whether as an act of goodwill or planning your real estate, you must use a quitclaim deed. It is the easiest and the most convenient way to transfer the property to your child.
All you need is to contact an attorney to prepare the deed for you and provide the attorney with your full name, your spouse’s and child’s name and the property address. After the deed is prepared, you will be required to sign it in the presence of the notary public to complete the transfer.
Mistakes to Avoid Before Signing a Quitclaim Deed
Most of the homeowners fail to understand some implications and the pitfalls associated with signing a quitclaim deed. Here are some of the reasons you should pause and consider with clarity before signing the deed:
- Most homeowners tend to underestimate the indispensable value of an attorney– A vital aspect of the quitclaim deed is accuracy, and a competent lawyer will ensure all the details in the deed are accurate and precise. Besides, a lawyer will give detailed background information about you, your child and the property involved.
- After the draw, homeowners don’t engage in a legal overview to correct any errors– Some minor mistakes like the names and addresses of the grantee, that are overlooked might have devastating effects in the future.
- Failure to record the deed– As a final part of the process, you need to send the deed to the local recorder’s office. Failure to file it might question the genuineness of the process and result in penalty charges.
- If your child is a minor, he or she is not able to sell or give back his share of the property once you transfer the ownership- This means that for all the events that involve the house, like refinancing and or selling will require you to appoint someone on his behalf to protect his interest in the property.
If you’re looking for an experienced real estate lawyer who will help you with all aspects of buying a home, contact us for more information.