Somebody has died, you have been named executor, and a lawyer has told you the estate will need probate before the house can be sold. That is usually right.
Sometimes it is not, and the difference is often five figures.
There is a rule in Ontario called the first dealings exemption. A surprising number of families never hear of it, because it only gets checked when somebody asks. If nobody asks, the estate pays a tax it may not have owed, and nothing about the process signals that anything was missed.
Here is what it is and how to find out whether it applies to you.
First, what probate actually costs
Probate is the court confirming the will is valid and that you are the person with authority to act. Applying triggers Ontario’s Estate Administration Tax, which most people still call probate fees.
There is no tax on the first $50,000. Above that it is $15 for every $1,000, or part of $1,000. So:
- A $900,000 estate pays $12,750
- A $1,400,000 estate pays $20,250
For most families in York Region the house is the estate, which means the house is what sets that number. You can work out yours with our probate cost calculator, which also covers the two things people wrongly include in the total. Recent clients of ours have used that calculator to get an idea of what they might be responsible to pay.
What the exemption does
Ontario used to record land under an older system called Registry. Starting in the mid 1990s the province converted properties over to a newer system called Land Titles.
If the person bought the home before their property was converted, and the title has not been transferred to anyone since that conversion, it may be possible to transfer the home to the beneficiaries, or sell it, without probating the will at all.
No probate application. No Estate Administration Tax on the house.
On a home in Newmarket, Aurora, Richmond Hill or Markham, that is frequently more than ten thousand dollars that simply does not have to be paid.
The part that catches people out
Families hear “before the mid 1990s” and assume a home bought in 1999 or 2003 cannot possibly qualify. That is the most common reason the question never gets asked.
The conversion did not happen on one day across Ontario. It rolled out county by county over roughly fifteen years. What matters is the date this particular property was converted, not a single province-wide date.
Plenty of homes bought in the late 1990s and early 2000s still qualify. Ask regardless of when it was purchased, because the only way to know is to look at the title.
Recent clients of ours were pleasantly surprised once their lawyer checked the title.
When it does not apply
It is a narrow rule, and it is worth being realistic about that. Broadly, all of these need to be true:
- The title has to be flagged Land Titles Conversion Qualified
- There has to be a valid will
- The property must not have been dealt with since the conversion
- The will must not already have been probated for some other reason
A mortgage that was registered and later discharged does not usually disqualify a property. A transfer of ownership does. So if the home was put into joint names with an adult child at some point, or moved between spouses, that is very likely the end of it.
Joint ownership between a parent and an adult child is worth a separate conversation with the estate lawyer in any case. It rarely does what families expect it to do.
What to actually do
When you first speak to the estate lawyer, ask them this, in these words:
“Does this property qualify for the first dealings exemption?”
It takes a title search to answer, which the lawyer can do quickly. If the answer is no, you have lost nothing but the asking. If the answer is yes, the estate keeps money it was about to hand over.
Ask before the probate application is prepared, not after. Once the will has been probated the opportunity is gone.
While you are at it
Two other things belong in that first conversation with the lawyer, and both are easier to deal with early than late.
The small estate certificate. Ontario has a simplified probate route for smaller estates. It cuts the paperwork considerably. It does not reduce the tax, and the threshold is set by regulation, so confirm the current figure rather than relying on a number you read somewhere.
The insurance on the house. If the home is now empty, this is genuinely urgent, and it is not something the lawyer will raise. Most Ontario policies can suspend or void coverage once a property has been empty for around 30 days without the insurer being told. We wrote about that separately in what to do when the house is empty, and if the home has been sitting for a few weeks already, read that before you read anything else.
Why we know about this
We work with executors across York Region and Durham, and the property is usually the largest single thing on the list. Over the years the same avoidable costs come up, and this is the biggest of them.
The whole first year, in the order things actually arrive, is set out in our free guide for executors. It covers probate, the tax deadlines, the clear out, the sale, and the point where an executor can be held personally responsible. It costs nothing and asks for nothing.
If it would help to talk it through, tell us where you are at and one of us will answer personally, whether or not you ever list the home with us.
This is general information for Ontario, not legal or tax advice. Whether the first dealings exemption applies to a particular property is a question for the estate lawyer, and it takes a title search to answer. Figures were current at the time of writing.