Selling an inherited home in Ontario

In Ontario, an estate trustee usually needs a Certificate of Appointment of Estate Trustee, commonly called probate, before a house held in the deceased's name alone can be sold. The province's own guidance lists real property that does not pass by right of survivorship, and real property that must be sold, among the situations that require the certificate. If the home was held jointly with a surviving spouse, it typically passes to that spouse outside the estate and no probate is needed for it. A simplified small estate process exists for estates valued at up to $150,000, but an estate holding a house in Mississauga will almost always exceed that. The application is filed with the Superior Court of Justice with the will, an inventory of assets and the tax deposit, and the beneficiaries must be served first. Court processing times vary by region and by season, so build the wait into your plan. The team can prepare the listing while probate is pending, and list once the certificate is issued.

Ontario charges an Estate Administration Tax on the value of the estate when you apply for the certificate. For applications on or after January 1, 2020, there is no tax on the first $50,000 of estate value, and the rate is $15 for every $1,000, or part of it, above that threshold. The tax is paid as a deposit with the application and is calculated on the fair market value of the assets at the date of death, including the home, less any mortgage registered against it. Within 180 calendar days after the certificate is issued, the estate trustee must file an Estate Information Return with the Ministry of Finance reporting the asset values used. Getting the home's date-of-death value right therefore matters twice: for this return and for the tax treatment described below. A written opinion of value from the team, or a formal appraisal where your lawyer prefers one, gives you a defensible figure. Your lawyer will confirm what must be included in the estate value.

Until the house is sold, the executor is responsible for it: keeping insurance in force and telling the insurer the home is vacant, since vacancy can affect coverage; maintaining heat in winter and checking the property regularly; paying property taxes and utilities from estate funds; and securing valuables. Before listing, the contents must be dealt with, and the team can refer estate clearing services that sort, donate and dispose in a single pass. You also have a duty to obtain a fair price for the beneficiaries, which is why executors usually market the home publicly rather than selling privately to a family member at an untested figure. If beneficiaries disagree about listing price or timing, the executor decides, but keeping them informed with the team's written valuation and marketing plan prevents most disputes. The agreement of purchase and sale is signed by the estate trustee in that capacity, and the buyer's lawyer will require a copy of the certificate on closing.

The Canada Revenue Agency treats a person as having sold all their property at fair market value immediately before death, even though nothing was actually sold. If the home was the deceased's principal residence for every year they owned it, the gain on that deemed sale is exempt, but the legal representative must still designate the property on the final return using Schedule 3 and Form T1255. The estate's cost base for the home then becomes the fair market value at death. When the estate later sells the house, any gain is generally the difference between the sale price and that date-of-death value, less selling costs, and it is taxed in the estate as a capital gain, of which a portion is included in income. If the home rises in value during a long estate administration, that difference is taxable; if it is sold promptly, it is often small. The final return is due April 30 of the year after death, or six months after death for deaths in November or December. Your accountant should handle these filings.

After the sale closes, the proceeds sit in the estate. Before distributing them to beneficiaries, the CRA advises the legal representative to obtain a clearance certificate, which confirms that all income tax and GST/HST owed by the deceased and the estate have been paid or secured. The reason is personal: a representative who distributes assets without the certificate is personally liable for unpaid amounts, up to the value of what was distributed. The request is made on Form TX19 only after the required returns have been filed and assessed, and it should not be sent with the returns themselves. Many executors make an interim distribution and hold back a reserve until the certificate arrives; whether that is appropriate for your estate is a question for your lawyer. The timing means a realistic estate sale runs from probate through listing, closing, the final and estate returns, and clearance, which can span a year or more. Knowing that at the start makes the wait easier to explain to the family.

If you are handling an estate with a Mississauga home in it, ask the team for a date-of-death valuation and a listing plan that fits the probate timeline.