Giving Your Children Money From the House Sale: Gifts, Loans and Tax in Canada

By Jatin Dua · Broker of Record, RE/MAX Quantum Realty · Updated 29 September 2026 · 10 min read — why a cash gift is not taxed in Canada, when the attribution rules pull income back to you, what happens if you give the house or cottage itself, gift versus loan, and how giving now compares with leaving it through your estate and Ontario’s Estate Administration Tax.

The short answer, situation by situation

Once the family home is sold, many parents want to help a child with a down payment, clear a student loan, or just see the money used while they’re alive. The good news is that Canada doesn’t tax the gift itself. What matters is who gets it and what you give.

This is general information from CRA and Ontario pages. Your accountant and lawyer should look at your own situation before any money moves.

Cash from a principal residence sale is usually the simplest gift

Most parents in this position have already sold. If the house was solely your principal residence for every year you owned it, the gain wasn’t taxed, although you still had to report the sale on Schedule 3 and Form T2091 (the details are in selling your home in retirement: the tax side). What you have now is cash, and cash is easy to give.

CRA’s list of amounts that are not reported or taxed includes “most gifts and inheritances”. Your adult child doesn’t put the gift on their return. You don’t get a deduction for it, and you don’t pay tax on handing it over.

The income on the money is a separate question. While the money is yours, the interest and returns are taxed on your return. Once it truly belongs to an adult child, what it earns is generally theirs. The two main attribution rules in CRA’s bulletins cover spouses and minors, which I explain below. Loans to adult children can raise other tax questions, so ask your accountant before you lend rather than give.

The attribution rules: spouses and children under 18

Attribution rules stop families from moving investment income to whoever pays the least tax. CRA’s older interpretation bulletins, archived in 2017, describe two main cases. Treat them as background and confirm the current rules with your accountant.

• Spouse or common-law partner (IT-511R). Income and taxable capital gains from property you transfer or lend to your spouse are attributed back to you. The exceptions are a transfer at fair market value, or a loan at CRA’s prescribed rate where the interest is actually paid within 30 days of the end of each year.
• A related child under 18 (IT-510). Income from property you transfer or lend to a related minor, such as a child or grandchild, is taxed in your hands until the year they turn 18. Capital gains are not attributed. The bulletin says the rule “does not apply to attribute to the transferor any taxable capital gain”.

In practice, if you give $50,000 to be invested for a 12-year-old grandchild, the interest and dividends are taxed on your return until the year they turn 18. Growth that shows up as a capital gain is theirs. Registered plans like RESPs have their own rules, and your accountant can explain them.

Giving the house or cottage itself

Some parents would rather pass on property than cash: the cottage to the child who uses it, or a share of the family home to a child who lives there. CRA’s rules are clear:

• “If you give capital property as a gift, you are considered to have sold it at its fair market value.” You report the gain as if you had sold it.
• Selling to a family member for less than market value is also treated as a sale at fair market value. You get the tax of a full sale without the cash.
• Your child is “generally considered to have acquired the property at its fair market value” on the day they received it. That becomes their cost when they sell later.
• Transfers to a spouse are different. They usually roll over at your cost with no immediate gain, but when your spouse sells, the gain is reported by you.

If the property was your principal residence every year you owned it, the exemption may cover the deemed gain. For a cottage or rental, it usually won’t, and the OAS clawback can follow a large gain. Once your child owns the property, it’s exposed to their finances and their relationships, not just yours. That’s a lawyer conversation. The capital gains side is explained in capital gains when downsizing.

Gift or loan? Write it down either way

This is where families get into trouble years later. A handshake “it’s a gift, but you’ll pay us back when you can” means different things to different people. Decide which it is and document it.

• A gift is gone. You can’t call it back if you need it for care later, or if your child’s relationship ends. If the money is for a down payment, the lender may ask for a signed letter confirming it’s a gift and doesn’t have to be repaid.
• A loan should be written up with the amount, the repayment terms, what happens on your death, and possibly security on the property. A lawyer can tell you how a documented loan is treated if your child’s marriage breaks down, and whether a mortgage should be registered.
• Fairness between children. If you help one child now, decide whether it counts against their share of the estate, and put that in your will. Unwritten intentions are what executors end up fighting over.

I’m a real estate broker, not a lawyer. What I can tell you is that the families who handle this well spend an hour with a lawyer before the money moves.

Giving now vs leaving it through your estate

In Ontario, what you own at death usually goes through probate. The Estate Administration Tax is nothing on the first $50,000 and “$15 for every $1,000 (or part thereof)” above that, which works out to 1.5%. The executor also has to file an Estate Information Return within 180 days of the certificate being issued.

That’s arithmetic on the Ontario rate. Each $200,000 given away during your lifetime lowers the estate by that amount and saves $3,000 of the tax, as long as it’s a real gift and not money you keep control of.

Probate savings are the smallest part of the decision, though. Giving now means you see the money used and can help when it matters most. Leaving it means you keep control and keep a cushion for care. An executor can also sell property after death, as I explain in executor selling a home in Ontario and selling a house after death.

Keep enough for yourself first

The most generous parents I meet are sometimes the ones who under-plan for their own care. Before you write any cheque, price the next twenty years for yourself:

• Long-term care co-payments from 1 July 2026 are $2,129.17 a month for basic accommodation and $3,041.97 for private.
• Retirement homes are paid entirely by residents. CMHC’s last survey (2021) put the Toronto CMA average at $4,016 a month for a studio or private room with meals, and CMHC has since discontinued that survey.
• Your next home. Condo fees, property tax and land transfer tax all come out of the same proceeds.

The downsizing money planner below estimates what the sale frees up and the monthly cost of staying versus moving. Run it before you decide how much to give. For the full retirement picture, see how much you need to retire in Toronto and the GTA retirement guide.

A checklist before the money moves

1. Confirm the house sale was reported correctly (Schedule 3 and T2091).
2. Work out your own housing and care costs for the next 20 years, and add a margin.
3. Decide gift or loan for each child, and whether it counts against their share of the estate.
4. If a spouse or a child under 18 is involved, ask your accountant about attribution.
5. If you’re giving property rather than cash, get the fair market value and the tax on the deemed sale before you commit.
6. Have a lawyer document the gift or loan and update your will and powers of attorney.

If you would like to talk any of this through, with or without your family on the line, book a call or phone 833-330-1925. No pressure and no obligation.

Frequently asked questions

Sources

• CRA — Amounts that are not reported or taxed — most gifts and inheritances not taxed
• CRA — Transfers of capital property — gift = sale at FMV; spousal rollover; below-FMV sales
• CRA — Special rules and other transactions — recipient's cost is FMV
• CRA — IT-511R Interspousal and Certain Other Transfers and Loans of Property (archived) — spousal attribution and exceptions
• CRA — IT-510 Transfers and Loans of Property to a Related Minor (archived) — income attributed until 18; capital gains not attributed
• Government of Ontario — Estate Administration Tax — $0 on first $50,000, $15 per $1,000 above; 180-day return
• CRA — Reporting the sale of your principal residence for individuals — Schedule 3 and T2091
• Government of Ontario — Paying for long-term care — co-payments from 1 July 2026
• CMHC — Seniors' vacancy rate and average rent, Ontario (2021) — Toronto CMA $4,016, last survey
• CMHC — Seniors Housing Survey data — survey discontinued

Related reading

• Best Places to Retire in the GTA (2026): A City-by-City Comparison
• Selling Your Home in Retirement: The Tax Side
• Capital Gains When Downsizing in Ontario
• Executor Selling a Home in Ontario
• Power of Attorney vs Executor: Selling a Home in Ontario
• Selling the House to Pay for a Retirement Home
• How Much Do You Need to Retire in Toronto? (Housing Side)