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Summary: The main ways to split equity in a property are joint tenancy (equal shares with a right of survivorship, best for spouses), tenancy-in-common (any share split, with each owner's share passing through their estate), a mix of the two, corporate ownership through a holding company, and trusteeship. The right choice depends on who the co-owners are and what they want to happen to their share when they die.
There are many reasons to split equity in a property: leaving it as an inheritance, co-owning an investment, or helping a family member qualify for a mortgage. Different methods suit different goals. Here are the main options and when each one makes sense.
How can you split equity in a property?
There is no single way to share ownership of real estate. The options below differ in how the shares are divided, what happens to an owner's share when they die, and how much administration and tax come with each. Here is a quick comparison before the detail:
Method | How shares split | On an owner's death | Best suited to |
Joint tenancy | Always equal | Passes automatically to surviving owners (right of survivorship) | Married or common-law couples |
Tenancy-in-common | Any split (50/50, 80/20, 99/1) | Stays in the owner's estate for their heirs | Business partners, unequal contributions, financial independence |
Corporate ownership | By shareholding | Shares transfer privately, not on title | Groups of investors entering and exiting at different times |
Trusteeship | Title holder acts for a beneficial owner | Governed by the trust arrangement | Privacy, or where the beneficial owner cannot borrow |
What is joint tenancy?
If you hold title with someone else as joint tenants, each of you has a right of survivorship. When one owner dies, the surviving joint tenants immediately split the deceased owner's equity equally among themselves. They register a survivorship application on title to update ownership, but there is no need to probate the deceased owner's will (probate is the procedure that gives a person authority to act as trustee of an estate) or pay any tax.
This is typically the best choice for married or common-law couples who plan to leave their equity in the home to their spouse, because it avoids applying for probate or paying the estate administration tax before title can transfer. It is not ideal for business partners with dependants, since the deceased owner's share does not stay in their estate, so their beneficiaries do not benefit. Two things to note:
A joint tenancy is always an equal division. You cannot split a property 70/30 as joint tenants, or 80/10/10.
You can always sever a joint tenancy, converting it to a tenancy-in-common, and you do not need the co-owners' consent to do so.
What is tenancy-in-common?
A tenancy-in-common lets multiple owners split equity into whatever shares they choose, such as 50/50, 80/20, or 99/1, and lets a deceased owner keep their share in their estate for their heirs. Owning as a tenant-in-common usually means you should prepare a will to name the beneficiary of your share, and your estate will likely pay tax on the value of that share.
If your intent is to leave your share to your co-owner, consider joint tenancy instead. Tenancy-in-common is more appropriate for people entering a business venture together, for owners who want their shares to reflect different contributions to the purchase price, or for couples who want to keep their finances independent. One more thing to note:
Tenancy-in-common can be used to minimize capital gains tax where one co-owner does not occupy the property as a principal residence. For example, a first-time buyer may need a parent on title to qualify for a mortgage. The child, who lives in the home, can hold title as a 99% owner, and the parent as a 1% owner. On sale, the child would be exempt from capital gains tax, while the parent would owe capital gains tax on only 1% of the property's value.
Can you mix joint tenancy with tenancy-in-common?
Yes, under certain circumstances. Picture two married couples buying an investment property together. There are four owners on title, but each spouse wants to leave their equity to their partner if they die. Couple A and Couple B hold as tenants-in-common in relation to one another, while the two spouses within each couple hold as joint tenants in relation to each other. That preserves the survivorship benefit inside each couple and a defined share between the couples.
What is corporate ownership?
Another option for multiple owners is to set up a corporation as a holding company for the property and give each investor shares in the company. This can be the best choice for a purchase with many investors who may want to exit at different times. Instead of transferring ownership on title each time, which means registration costs and a lawyer's involvement, investors transfer company shares among themselves. Corporate ownership can also help insulate individual investors from liability.
What is trusteeship?
Sometimes the person on title is only acting as a trustee for the actual beneficial owner. This might be for privacy, or because the beneficial owner cannot qualify as a borrower on a loan. A trusteeship must be disclosed to the government, but it does not have to appear on title, so the beneficial owner's involvement is not visible to the public.
Splitting equity is an effective way to pass on an inheritance or make sure each owner gets their fair share of an asset. Setting it up correctly is where a real estate lawyer matters, since the method you choose has lasting estate and tax consequences. If you are buying and need help closing, or want to split equity on a property you already own, you can get in touch with us or read 7 reasons why you need a real estate lawyer.
Frequently asked questions
What is the difference between joint tenancy and tenancy-in-common?
Joint tenants always hold equal shares and have a right of survivorship, so a deceased owner's share passes automatically to the others. Tenants-in-common can hold unequal shares, and a deceased owner's share stays in their estate for their heirs rather than passing to the co-owners.
What is right of survivorship?
Right of survivorship means that when one joint tenant dies, their share passes automatically to the surviving joint tenants, who split it equally. It avoids probate and estate administration tax on that share, which is why it suits spouses who want the home to pass to each other.
Can you split a property into unequal shares?
Yes, but only as tenants-in-common. A tenancy-in-common can be divided 50/50, 80/20, 99/1, or any other split. A joint tenancy, by contrast, is always an equal division and cannot be set up 70/30 or 80/10/10.
How does a 99/1 ownership split save on capital gains tax?
If a parent goes on title only to help a first-time buyer qualify for a mortgage, the child can own 99% and the parent 1% as tenants-in-common. Because the child occupies the home as a principal residence, their share is exempt on sale, and the parent owes capital gains tax on just 1% of the value.
Do you need a lawyer to split equity in a property?
Yes. How title is held has lasting estate and tax consequences, so a real estate lawyer should set up or change the ownership structure. They register the correct tenancy on title and make sure the arrangement matches what the owners actually intend.
About the author
Benjamin Berry is a co-founder and principal lawyer at Ownright. He works on Ontario residential real estate, including how clients hold and structure title, and writes to make the legal side of property ownership easier to understand.
At Ownright, we focus on Ontario real estate law and on making your transaction transparent and stress-free. You can start your closing online or get in touch with any questions.
Legal references: Estate Administration Tax Act, 1998 (Ontario); Land Titles Act, R.S.O. 1990, c. L.5. Capital gains and principal-residence rules are governed by the federal Income Tax Act.
Important note: This article is for general information only and is not legal or tax advice. No one should act, or refrain from acting, based solely on the information in this post or any linked materials without first seeking appropriate legal or tax advice.
