Holding Toronto Residential Property Personally, Jointly, in a Corporation or in a Trust: What Changes

This note is for families deciding how to hold a Toronto home or condominium: in one name, jointly, through a corporation or through a trust. Short answer: for a home the family lives in, personal or joint ownership usually keeps the most important tax relief available, the principal residence exemption. A corporation cannot claim that exemption, and a trust can claim it only in limited cases. Land transfer tax applies whichever structure is chosen, and changing the structure after closing can bring new tax costs.

Links to the official sources are included throughout. Your lawyer and accountant should confirm how each point applies to your family.

Owning personally or jointly

Most Toronto homes are held by individuals, alone or together. Where two or more people take title, Ontario's Conveyancing and Law of Property Act provides that they hold as tenants in common, not as joint tenants, unless an intention to hold as joint tenants appears on the face of the transfer. This applies even where the owners are spouses. The form of joint ownership affects what happens to each share on death, which is one reason estate planning and title decisions should be made together.

For income tax, joint ownership does not prevent a claim to the principal residence exemption. The CRA states that "joint ownership with another person qualifies for this purpose."

The principal residence exemption: who can claim it

The principal residence exemption can reduce or eliminate the capital gain on the sale of a home. Under section 40 of the Income Tax Act, the exemption applies "where the taxpayer is an individual." A corporation is not an individual, so it cannot use the exemption. Certain personal trusts can, as discussed below.

Two limits matter for families with more than one property. According to the CRA, a taxpayer can designate only one property as a principal residence for a particular tax year, and "for a tax year that is after the 1981 year, only one property per family unit can be designated as a principal residence." The home generally must be inhabited by the owner or by the owner's spouse or common-law partner, former spouse or common-law partner, or child.

The rules on gains from investment property are covered in Capital Gains Tax on Investment Property in Canada.

Holding a home or condominium in a corporation

A corporation is a separate taxpayer. The CRA states that all resident corporations, including inactive ones, have to file a T2 return for every tax year, even if there is no tax payable. Rental income and gains on the property are taxed in the corporation, and because the exemption is limited to individuals, no part of the gain on a corporately held home can be sheltered as a principal residence.

The corporate small business rate is also generally unavailable for rent. The CRA's T2 guide describes a specified investment business as one whose principal purpose is "deriving income from property, including interest, dividends, rents, or royalties," and states that this income is generally not eligible for the small business deduction, subject to limited exceptions such as employing more than five full-time employees in the business.

The more significant issue for a family home is personal use. The CRA lists "personal use of your (the corporation's) property (for example, house, car, yacht) without a FMV charge or return" as an example of a shareholder benefit. Under the CRA's audit manual, the benefit is usually valued at fair market rent less any amount the shareholder pays, but fair market rent may not be appropriate where it does not provide a reasonable return on the value or cost of the property, "for example, for a luxury residence." Where the corporation acquired the property primarily for the shareholder's personal use, the benefit is based on the time the property was available to the shareholder, not the time it was actually used.

Taken together, the loss of the principal residence exemption and the shareholder benefit rules generally make corporate ownership of a personal residence unattractive.

Holding property in a trust

Families use trusts for a range of succession and planning reasons. Where a trust holds a home, three points are central.

The 21-year rule. The CRA's T3 Trust Guide explains that a trust is deemed to have disposed of its capital property at fair market value on its deemed disposition day, and reacquired it at the same value. For most personal trusts, that day is 21 years after the trust was created, with further deemed dispositions every 21 years. Spousal or common-law partner trusts, joint spousal trusts and alter ego trusts follow different dates tied to a death. A trust holding a Toronto home that has risen in value can therefore face tax without any sale.

The principal residence exemption for trusts. A personal trust can claim the exemption, but the CRA's folio states that for tax years beginning after 2016, the trust must fall within specific categories: broadly, an alter ego, spousal or common-law partner, or joint spousal trust; a qualified disability trust; a trust for a minor child resident in Canada whose parent, a settlor, has died; or a trust for a qualifying individual eligible for the disability tax credit. The trust must also specify the beneficiaries who inhabit the home, and its designation is treated as a designation by each of them, so no other property can be designated by those beneficiaries' family units for the same years.

Reporting. According to the CRA's enhanced trust reporting FAQ, updated October 5, 2026, trusts that must file a T3 return generally include Schedule 15, which identifies trustees, settlors, beneficiaries and controlling persons. Bare trusts are not required to file for taxation years ending in 2024 or 2025, but "certain bare trusts are required to file for taxation years ending on or after December 31, 2026." The CRA lists exceptions relevant to homes, including related individuals on title to a property that would be a principal residence of one of them, such as a parent on title to help a child obtain a mortgage. Families with a nominee or "on title only" arrangement should have it reviewed before year end.

Land transfer tax applies whichever structure you choose

Ontario's land transfer tax is payable when you acquire land or a beneficial interest in land, whether the purchaser is an individual, a corporation or a trustee. On a transfer of land to a corporation for shares, or from a corporation to a shareholder, the tax is based on fair market value. Ontario's exemption for transfers to a family business corporation requires an active business carried on on the land and excludes a specified investment business, so it will not generally assist with a home.

For trusts, Ontario's guidance on conveyances involving trusts states that where there has been no change in beneficial ownership, the value of consideration is nil. A change in beneficial ownership that is not registered on title within 30 days is still taxable, and a return must be filed with the Ministry of Finance.

In Toronto, the Municipal Land Transfer Tax applies in addition to the provincial tax, including on unregistered dispositions of a beneficial interest in land. Worked examples are in Toronto Land Transfer Tax on Luxury Homes.

Where a foreign element is involved, the structure does not avoid Ontario's 25% Non-Resident Speculation Tax. It applies to foreign corporations, including Canadian corporations controlled by foreign nationals, and to "taxable trustees", meaning a trustee of a trust with a foreign trustee or a foreign beneficiary. If any one transferee is a foreign entity or taxable trustee, the tax applies to the full value of the consideration. Toronto adds its own 10% Municipal Non-Resident Speculation Tax, effective January 1, 2025, using similar definitions of foreign corporation and taxable trustee. See Ontario's foreign buyer rules and NRST.

Practical points before you sign

• Decide the structure before the agreement is signed. Moving a property into a corporation or trust later can be a disposition for income tax purposes, and land transfer tax can apply where beneficial ownership changes.
• Expect corporate financing to be harder. In my experience, corporate owners typically find mortgage lending harder. Lenders treat a corporate borrower differently from an individual, and the approval process is more involved. Speak with your lender early.
• Keep a cost base file. The CRA explains that cost includes "capital expenditures, such as the cost of additions and improvements to the property," but not maintenance and repairs. Keep the statement of adjustments, renovation invoices and any designations.

How I work with your advisers

My role is on the real estate side: identifying the right property, structuring the offer and timing the closing so that the ownership decision your advisers recommend can be carried through cleanly. I work alongside each client's lawyer and accountant, who advise on structure and tax. For a confidential conversation, I can be reached through the contact page.

Frequently asked questions

Can a corporation claim the principal residence exemption?

No. Under section 40 of the Income Tax Act, the principal residence exemption applies where the taxpayer is an individual. A corporation is not an individual, so a gain on a home it owns cannot be sheltered by the exemption.

Is there a tax cost if I live in a home owned by my corporation?

Generally, yes. The CRA treats personal use of corporate property, such as a house, without a fair market charge as a shareholder benefit. The benefit is usually based on fair market rent, but for a luxury residence the CRA may use a measure based on a reasonable return on the property's value or cost.

Does a trust have to sell its property after 21 years?

No sale is required, but most personal trusts are deemed to dispose of their capital property at fair market value 21 years after the trust was created, and every 21 years after that. Tax can arise on the gain without any sale.

Does land transfer tax apply when buying through a corporation or trust in Toronto?

Yes. Ontario land transfer tax and the City of Toronto Municipal Land Transfer Tax apply to acquisitions of land or a beneficial interest in land, including by corporations and trustees. Foreign corporations and taxable trustees may also pay Ontario's 25% Non-Resident Speculation Tax and Toronto's 10% Municipal Non-Resident Speculation Tax.

Sources

• Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, s. 13 (Government of Ontario, e-Laws)
• Income Tax Folio S1-F3-C2, Principal Residence (Canada Revenue Agency)
• Income Tax Act, section 40 (Justice Laws Website, Government of Canada)
• Find out if you have to file a corporation income tax return (T2) (Canada Revenue Agency)
• T2 Corporation Income Tax Guide, Chapter 4 (Canada Revenue Agency)
• Shareholder benefits (Canada Revenue Agency)
• Income Tax Audit Manual, Chapter 24 (Canada Revenue Agency)
• T3 Trust Guide (Canada Revenue Agency)
• Enhanced reporting rules for trusts and bare trusts: FAQ (Canada Revenue Agency)
• Land Transfer Tax (Government of Ontario)
• Exemption for Certain Transfers of Land to Family Business Corporations (Government of Ontario)
• Conveyances Involving Trusts (Government of Ontario)
• MLTT and MNRST Program Information (City of Toronto)
• Non-Resident Speculation Tax (Government of Ontario)
• Definitions for capital gains (Canada Revenue Agency)