If you’re thinking about buying a property near a university for your child to live in while they study, and potentially with rental income in mind – you might be wondering whether it makes sense to register the property in your child’s name rather than your own. In many cases, doing so can offer strategic advantages, but it’s not without risks, and you’ll want to go in with a clear plan and professional advice.

Here’s a breakdown of the possible benefits and the important caveats.

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Possible Benefits of Putting the Property in Your Child’s Name

1. Financing & Mortgage Flexibility

When a property is in your child’s name and they are living there as their primary residence, lenders often treat the situation differently than a pure “investment” or “secondary property.” That can mean more favourable terms (such as lower down payment requirements, though this depends hugely on credit, income, and lender). Having your child on title in their name could open up more financing options.

2. First-Time Buyer Land Transfer Tax (LTT) Benefit

In Ontario, for example, if the buyer is a first-time homebuyer (i.e., they have never owned a home anywhere in the world, are at least 18 years old, are a Canadian citizen or permanent resident, and will occupy the property as their principal residence within nine months of transfer), they may be eligible for a rebate of up to $4,000 of the Ontario Land Transfer Tax.

If the property is in your child’s name and they qualify as a first-time buyer, you may access that benefit (assuming all requirements are met). This could be a material savings at closing.

3. Principal Residence Exemption (PRE) from Capital Gains Tax

When a property qualifies as a “principal residence” under rules set by the Canada Revenue Agency (CRA), the increase in value (capital gain) when you sell can be exempt (or mostly exempt) from tax. If your child truly lives in the house as their home and you structure things properly so the property is their principal residence (rather than purely a rental property), you may capture this exemption.

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⚠️ Key Caveats & Things to Consider

A. Definition of “Ordinarily Inhabited” & Rental Use

To get the principal residence exemption, the property must be “ordinarily inhabited” by the owner (or their spouse/common-law partner) in the year. If the child is living there, that’s a good start, but if the property is also being rented (even partly) to other students, or treated as a pure investment property, the situation becomes more complex. The CRA views changes of use (personal to rental or vice versa) as a “deemed disposition” at fair market value, which can trigger capital gains. If you call it your child’s home but treat it like a student rental (with multiple tenants, leases, etc.), you may jeopardise the PRE, or trigger complicated tax reporting.

B. Land Transfer Tax & First-Time Buyer Criteria

While the first-time buyer LTT rebate can be compelling, the eligibility criteria are strict. For instance:

• The purchaser must never have owned a home anywhere in the world.

• The property must become the buyer’s principal residence (i.e., they must live there) within nine months of registration. If the child is buying the property but you expect others to live there (roommates, sub-tenants) and you’re treating it as a rental income source, you may not satisfy “principal residence” requirement. Also, if the child hasan  extremely modest income or limited credit history, obtaining financing in their name may be more difficult, or come with higher rates.

C. Financing, Ownership & Liability

Putting a property in your child’s name means they are legally the owner. That means:

• They bear the legal obligations (mortgage payments, property taxes, insurance, etc.)

• If they default, their credit is at risk.

• If they are under 18 (or not financially independent), financing may require parental guarantee or co-signing anyway.

• You (the parent) may still be heavily involved or even paying the majority of the costs 0 which introduces complexity: Are you really gifting the property, or is it a trust arrangement? That may have tax implications (e.g., attribution rules, taxable benefit) depending on your province.

• If you treat the property as a rental and you live elsewhere, you also need to determine who really controls & manages it: child or parent? That affects tax treatment.

D. Tax on Renting vs. Principal Residence Exemption

If the property is genuinely a rental (or partly a rental), you may have to treat it as income-producing, which changes the calculus: you’ll report rental income, deduct expenses, possibly claim capital cost allowance (CCA) — but once you claim CCA you lose eligibility for the PRE for those years. In short: If it’s mostly a rental, you may lose the full benefit of the principal residence exemption when you sell.

E. Change of Use Rules

If you convert a property from personal residence to rental (or vice versa), the CRA treats that as a “deemed disposition” at fair market value at the time of change-in-use. That can trigger a taxable gain at that time. You can elect under certain subsections of the Income Tax Act to defer or mitigate, but you must file appropriate documentation. If you plan to have the property serve partially as your child’s residence and partially as a student rental, you’ll need to work carefully to avoid unintended tax events.

F. Your Long-Term Strategy

Ask yourself: What is the end game?

• Are you planning for your child to live there during studies and then keep it as an investment?

• Or sell it once studies finish?

• Do you intend to use it as a student rental (multiple tenants) long-term, or just have the child as the primary occupant with possible occasional sub-tenants? Each scenario will affect how you should hold the title, how you report income, how you apply for principal residence exemption, and how you plan for tax. If you treat it as your child’s residence while they study, you may more easily claim PRE. But if you then switch to full rental use immediately after, you’ll trigger a change-of-use event.

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📝 Practical Steps & Tips

1. Get professional advice – Speak with a real-estate lawyer and a tax/accounting professional who knows both student-rental and first-time homebuyer rules in your province.

2. Clarify ownership structure – Are you gifting the property to your child? Are you co-owning? What happens if they leave school or move out?

3. Confirm child’s eligibility – Make sure your child meets any first-time buyer criteria (age, never owned property anywhere, residency, etc.).

4. Financing and credit check – If mortgage will be in child’s name, check if their credit/income support this. Possibly consider you as co-signer.

5. Define use and residency – Make sure the property is actually the child’s “principal residence” (they live there) if you want the PRE or first-time buyer rebate. Avoid mixing heavy rental use without accounting for tax implications.

6. Renting and sub-tenants – If you plan to have roommates or sub-tenants, document things clearly: Are they part of the child’s household, or is the property a rental business? The classification matters.

7. Plan for the future – If you’ll switch from residence to rental, know there may be change-of-use tax events. If you’ll sell after child graduates, know how the PRE works (and limitations).

8. Keep records – Ownership documents, rental agreements, evidence of child’s residence, capital improvements, change-of-use elections, etc.

9. Evaluate other costs – Even if you get favourable financing or rebates, student-rental properties often come with extra turnover, maintenance, perhaps higher wear-and-tear. Factor that into your ROI.

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Final Thoughts

Putting a student-rental property into your child’s name can be a smart strategy — particularly if:

• The child will live there as their primary residence

• They qualify as a first-time buyer and thus can access land transfer tax rebates

• You carefully plan to maintain the residency classification so you may take advantage of the principal residence exemption when selling

• You avoid treating it purely as a rental business (unless you’re comfortable with the tax consequences)

But it’s by no means a guaranteed “win” — the tax, financing and legal nuances mean there are many potential pitfalls. A mis-step could mean losing a tax exemption, triggering unexpected capital gains tax, or facing financing hassle.