Real estate often sits at the centre of an estate plan. In Toronto and across the GTA, an estate may include a primary residence, a condominium, a rental unit, an investment property, a jointly owned property, or several real estate assets.
These properties can raise practical questions that do not always arise with other assets. Who will manage the property after death? Will probate be required? What happens to tenants? Should the property be sold, transferred, or retained? How will mortgages, taxes, condominium fees, and maintenance expenses be paid?
Estate planning for GTA property owners should therefore address not only who receives the real estate, but also how it will be managed, valued, transferred, and administered following death or incapacity.
Why GTA Real Estate Can Complicate an Estate Plan
Real estate is valuable, physical, and often expensive to maintain. Unlike a bank account, a property may require continuing mortgage payments, insurance, repairs, utilities, property taxes, condominium fees, and tenant communication.
Because real estate may represent the largest part of a GTA estate, disagreements can arise when some beneficiaries want to sell while others want to retain the property. Fairness may also become an issue when one beneficiary receives real estate, and another receives cash or other assets of a different value.
Liquidity is another important consideration. An estate may own valuable Toronto real estate but lack the cash needed to pay debts, taxes, legal fees, and administration expenses without selling or refinancing property.
Condominiums Require Practical Planning
Condominiums are common estate assets throughout Toronto, Mississauga, Vaughan, Markham, Scarborough, Etobicoke, North York, and the surrounding GTA. After an owner dies, the estate trustee may need to secure the unit, notify the condominium corporation, maintain insurance, collect mail, and continue paying fees, utilities, property taxes, or special assessments. Parking spaces, lockers, keys, fobs, and building rules may also need attention.
An estate trustee may require a Certificate of Appointment of Estate Trustee, commonly called probate, before dealing with certain assets.
Small Estate Certificates
Ontario offers a streamlined Small Estate Certificate process for estates valued at $150,000 or less. However, given current real estate valuations across Toronto and the broader GTA, an estate containing sole ownership of a condo or rental unit will almost always exceed this threshold, making standard probate necessary unless the property passes by right of survivorship or another legal mechanism.
Rental and Investment Properties Add Another Layer
Rental properties involve both ownership and ongoing landlord responsibilities. Tenants may remain in the property after the owner dies, meaning rent must still be collected, repairs completed, and lease obligations addressed.
The estate trustee may need to decide whether to continue operating the rental, sell it with tenants in place, or transfer it to a beneficiary. Each option can involve financial, administrative, tax, and timing considerations.
Where an estate includes several rental units or investment properties, organized records can make administration easier. Relevant documents may include leases, rent ledgers, mortgage records, insurance policies, repair histories, tax documents, and property management agreements.
Mortgages and Carrying Costs Continue
Mortgages, home equity lines of credit, and secured debts do not disappear when a property owner dies. The estate trustee may need to contact lenders and ensure that payments continue while the estate is administered.
Property taxes, condominium fees, insurance, utilities, repairs, and maintenance expenses may also continue for months. Without sufficient liquid assets, the estate trustee may face pressure to sell property quickly.
An estate plan can address whether a property should be retained, transferred, or sold and whether enough cash will be available to cover carrying costs during the administration period.
Probate and Estate Administration Tax
Estate Administration Tax may be payable when an Ontario estate certificate is issued. The tax is currently calculated at $0 for each $1,000 of the first $50,000 of estate value and $15 for each $1,000 above $50,000.
Toronto real estate values can therefore make probate and Estate Administration Tax significant planning considerations. However, probate planning strategies should be reviewed carefully because they may affect control, taxation, creditor exposure, and family relationships.
Understanding Capital Gains and Deemed Disposition
Beyond provincial Estate Administration Tax, GTA property owners must plan for federal income tax upon death. Under Canadian tax law, a property owner is treated as having sold all capital assets at fair market value immediately prior to death, a process known as a deemed disposition.
While a primary residence is generally protected by the Principal Residence Exemption, investment properties and rental condos are fully subject to this rule. Any accrued gain on an investment property will trigger taxable capital gains, generating an income tax liability for the deceased’s final tax return. Because this tax bill must often be settled before assets are distributed, ensuring the estate has enough cash or liquidity to cover capital gains is a critical step in GTA real estate-related estate planning.
Multiple Wills
Multiple wills (using a primary will for assets that require probate and a secondary will for those that do not) are a popular strategy in Ontario to minimize Estate Administration Tax. However, real estate presents unique challenges.
Because the Ontario Land Registry Office generally requires a probated primary will to transfer real property held in an individual’s name, most GTA homes and condos cannot bypass probate through a secondary will alone. An exception exists for certain properties that qualify for the “First Dealings Exemption” under the Land Titles Act (typically properties held continuously by the same owner since the land system converted to digital records). Alternatively, real estate held inside a private corporation (a holding company) can often be transferred probate-free under a secondary will. A title search is necessary to confirm whether a specific property can avoid probate.
Joint Ownership Should Be Reviewed Carefully
Some owners add an adult child to title in an effort to simplify the transfer of property after death. However, this can create questions about whether the child was intended to receive the property or was added for convenience.
Joint ownership may also raise tax, creditor, family law, control, and beneficiary dispute concerns. The will, title documents, financial records, and communications should be consistent wherever possible to reduce uncertainty.
Planning for Blended Families
Real estate planning can become more complicated in blended families. A property owner may want a spouse or partner to remain in the home while preserving its value for children from an earlier relationship.
Without clear instructions, disagreements may arise over occupancy, expenses, sale timing, and ultimate ownership. Potential planning arrangements may include trusts, life interests, gifts under a will, co-ownership structures, or domestic contracts.
Reviewing Estate Plans After Family Changes
Estate plans should be reviewed after marriage, separation, divorce, or other significant family changes. Under Ontario’s current family laws, marriage does not automatically revoke an existing will. This means a will drafted prior to a marriage remains valid unless explicitly updated or replaced.
Additionally, separated spouses who have lived apart for three or more years (or who have a formal separation agreement or court order) are treated similarly to divorced spouses. Unless a will states otherwise, gifts to a separated spouse and their appointment as an estate trustee are automatically revoked upon separation.
Incapacity Planning Matters Too
Estate planning should address what happens if a property owner becomes incapable during their lifetime. A continuing power of attorney for property can authorize another person to manage financial and real estate matters.
For rental and investment properties, someone may need authority to collect rent, pay mortgages, hire contractors, communicate with tenants, or make decisions about maintaining or selling the property.
Without appropriate planning, family members may need to seek legal authority before acting, potentially causing delays when immediate property decisions are required.
Organized Records Can Reduce Problems
Property records should be kept organized and accessible. For condominiums, this may include mortgage documents, insurance information, tax bills, condominium notices, parking and locker information, keys, and management contacts.
Rental property records may include leases, rent ledgers, tenant contact information, repair invoices, property management agreements, and tax documents.
These materials can help the estate trustee identify obligations, communicate with beneficiaries, complete tax reporting, obtain valuations, and prepare a property for transfer or sale.
Real Estate Deserves a Central Place in the Estate Plan
For many Toronto and GTA residents, real estate is the largest estate asset. Condos, rental units, and investment properties can create legal, tax, financial, and administrative issues that should be considered in advance.
A clear estate plan can identify who will manage the property, whether it should be sold or transferred, how expenses will be paid, and how beneficiaries will be treated. It can also support more efficient management if the owner becomes incapable or dies.
Baker & Company: Estate Planning for Toronto and GTA Real Estate
Individuals and families in Toronto, North York, Etobicoke, Scarborough, Vaughan, Mississauga, Markham, Richmond Hill, and across the GTA may face important estate planning decisions involving condos, rental units, investment properties, wills, powers of attorney, probate, and estate administration.
The estate lawyers at Baker & Company in Toronto can assist with reviewing property ownership, preparing estate planning documents, addressing estate trustee responsibilities, and developing plans for Ontario real estate assets. To discuss estate planning for a Toronto condo, rental property, investment property, or other GTA real estate asset, contact us online or call 416-777-0100.
