Estate administration tax when selling a Muskoka home

The short answer

Estate administration tax is an Ontario tax on the value of an estate. There is no tax where the estate is worth $50,000 or less. Above that, the tax is $15 for every $1,000 of estate value and a partial thousand counts as a full thousand. It is paid as a deposit when the estate trustee applies to the Superior Court of Justice for an estate certificate.

Because a Muskoka home often forms a large share of an estate, the tax and its timing matter before the property is listed. This page is general information. The estate’s lawyer calculates and files the tax.

The rules Ontario states

The Government of Ontario page on estate administration tax states the following:

• No tax is payable where the estate value is $50,000 or less, for applications made on or after January 1, 2020.
• Estates at or under $50,000 must still file an Estate Information Return within 180 days.
• For estates over $50,000, the tax is $15 for every $1,000, with partial thousands counted as full thousands.
• The tax is paid as a deposit when applying for an estate certificate from the Superior Court of Justice.
• The deposit can be refunded only if the certificate of appointment has not yet been issued by the court office.

The earlier rates

Ontario’s page also describes the rates before January 1, 2020. The old rule was $5 per $1,000 on the first $50,000 and $15 per $1,000 above $50,000, with no tax at $1,000 or less. The page explains the current rates for applications on or after January 1, 2020. If an estate file started before that date, ask the lawyer which rule applies.

Where a Muskoka property fits

Estate value includes the property the estate holds. For a family cottage or home, the estate’s lawyer will need a value for the estate filing. This page does not provide any valuation or price figure. If the property will be sold, a valuation prepared for the estate is separate from the tax calculation.

The tax is paid when the certificate is applied for. The steps of the certificate application were not found in the pages checked, so ask the lawyer for the order of events and how it affects when a sale can be listed and closed.

The Estate Information Return

Ontario’s page states that an estate at or under $50,000 must still file an Estate Information Return within 180 days. That means a small estate does not skip the paperwork even when no tax is due. The page checked did not set out the steps for the certificate of appointment of an estate trustee, so the lawyer is the right person to ask about the full list of forms and the order in which they are filed.

For a family that is planning a sale, the practical point is simple. The tax is tied to the court application and the court application is tied to the estate’s timeline. Treat the dates your lawyer gives you as the dates that drive the sale.

Timing questions for the family

• Has an estate trustee been named and has the certificate application started?
• What value is the lawyer using for the estate and where did it come from?
• When will the deposit be paid and who will pay it?
• Is a refund still possible and by what date?
• Can the home be listed before the certificate is issued?
• Who has the keys, the utilities and the insurance in the meantime?

The estate home guide walks through the process and the questions that come up. For a seasonal property, the property tax items are covered in the Muskoka waterfront property tax post. The sellers page explains how to begin.

What the tax does not cover

The estate administration tax is one cost. A sale of the property carries its own steps and a home may also have taxes or utilities owing that the estate handles. This page covers only the Ontario estate administration tax rows above. Questions about income tax on a death, on a sale or on a transfer of a property belong with an accountant, since none of those were researched for this page.

Reading the Ontario page yourself

Ontario publishes the estate administration tax rules on one page. It is worth reading in full before the family or the estate lawyer starts the sale. The page states that no tax applies where the value of the estate is $50,000 or less for applications made on or after January 1, 2020. It states that the tax is $15 for every $1,000 of value, with partial thousands counted as full thousands, for estates over $50,000. It states that the tax is paid as a deposit when the application for the estate certificate is made to the Superior Court of Justice.

The same page says a refund of the deposit is granted only if the certificate of appointment has not yet been issued by the court office. For a family with a Muskoka cottage or home in the estate, that point is a reason to have the estate lawyer confirm the estate value and the timing before anything is filed.

Because this site does not know the details of any estate, it does not work out a figure. The estate lawyer applies the rules to the value of the whole estate. That value can include more than one property. The lawyer confirms the amount.

What to confirm with professionals

Three people usually help with this: the estate’s lawyer, an accountant and the real estate team. The lawyer files the application and the tax. The accountant advises on other tax matters, which this page does not cover. Kirby can explain the selling steps and the paperwork a sale needs. None of this page replaces advice from the estate’s lawyer.

Ask Kirby how a sale fits around the estate’s timeline. The lawyer confirms the tax.