Planning for Downsizing or Long-Term Care in Ontario

When you’re thinking about retirement, downsizing, or long-term care, it’s natural to focus on the personal side, where you’ll live, how life will change, and what feels right for your family. But there’s also a legal side that’s important to get right.

If you’re selling your home, passing property to your children, or planning for long-term care, knowing how Ontario law applies can help you protect what matters and avoid unexpected costs or delays.

Here’s what to keep in mind as you plan your next steps.

Your Home and Long-Term Care: How They Connect in Ontario

One of the biggest questions people ask is whether their home will need to be sold to cover long-term care costs.

In Ontario, the answer is usually no.

When you move into a government-subsidized long-term care home, your accommodation fees are based on your income, not your assets. This means your home won’t automatically be counted when determining what you pay.

Local Context: Long Waitlists in Belleville and Prince Edward County

Many long-term care homes in Belleville and Prince Edward County have waitlists that can stretch several months or more. Planning early gives you better choices and reduces the chance of being placed in a facility outside your preferred area.

If private long-term care is part of your plan, it’s also worth understanding how the costs can quickly add up, and how selling your home might factor in.

Selling, Gifting, or Transferring Property: What the Law Says

If you’re thinking about selling your home to downsize, gifting it to family, or transferring ownership, each choice carries its own set of legal and tax considerations.

Selling Your Home

If you sell your primary residence, you don’t pay capital gains tax on the sale. That’s a valuable exemption, but it’s essential to:

• Keep full records of the sale
• Confirm the home was your principal residence for all applicable years

Proceeds from the sale might reduce certain income-tested benefits, so it’s helpful to review how this fits into your overall retirement plan.

Gifting or Transferring Property

Some people consider giving their home to their children before they pass away.
Here’s what to be aware of in Ontario:

• The Canada Revenue Agency treats gifts as if you sold the home at fair market value. This can create a tax bill even if no money changes hands.
• The child receiving the property may face additional land transfer taxes and could owe capital gains tax if they later sell the home.

Will the Government Look Back on Property Transfers?

While Ontario doesn’t have the same strict “look-back” period as the U.S. Medicaid system, large gifts or transfers made shortly before applying for long-term care might be reviewed. It’s best to speak with a lawyer to make sure your timing won’t create issues down the road.

Life Estates: Passing on Property Without Moving Out

A life estate allows you to transfer ownership of your home to your children now while keeping the right to live there for the rest of your life.

This arrangement:

• Can help reduce probate fees later
• Offers housing security for you
• Keeps the home in the family

However, life estates can limit your ability to sell or refinance the property in the future. They can also create tax complications for your children if they don’t live in the home themselves.

A life estate can be a good option in the right circumstances, but it’s not always the best fit for every family. It’s important to carefully review this with your lawyer.

Power of Attorney: Why It Matters for Real Estate Decisions

A Continuing Power of Attorney for Property is a key document that allows someone you trust to handle your finances and real estate if you become unable to make decisions yourself.

Without this document:

• Your family would need to apply to the Ontario court to get decision-making authority, a process that’s expensive, time-consuming, and stressful.
• Real estate transactions could be delayed, which is especially challenging in a fast-moving market like Belleville.

Having a valid Power of Attorney in place means your wishes can be carried out without costly legal hurdles if your health changes unexpectedly.

Reverse Mortgages: A Careful Choice

A reverse mortgage allows homeowners to access the equity in their home as tax-free cash while continuing to live there. These are sometimes marketed to retirees, but they come with important trade-offs:

• Interest compounds quickly and can reduce the value of your estate
• The loan typically must be repaid when you pass away or sell the home

If you’re considering a reverse mortgage, always take time to fully understand the terms and review the agreement with your lawyer. These can work for some families, but they are not risk-free.

Planning for Probate: Can You Skip It?

Ontario doesn’t currently offer transfer-on-death deeds for real estate. In most cases, real estate must go through probate unless:

• The home is owned jointly with a right of survivorship
• You’ve transferred ownership during your lifetime
• You’ve created a trust structure that avoids probate

Planning ahead with your lawyer can help minimize probate costs and delays while keeping control over how your property is passed on.

Supporting Your Next Move

Downsizing or planning for long-term care is about more than moving houses, it’s about protecting your choices, your home, and your family’s peace of mind.

At Jeffrey Murray Law in Belleville, we help individuals and families across Ontario with:

• Selling or transferring property
• Preparing Powers of Attorney
• Estate planning that fits your goals
• Long-term care planning

If you’re thinking about making a move or planning ahead, contact us today. We’re here to offer practical, local advice, without the pressure.