When one spouse is added or removed from the title of a property, it’s referred to as a title transfer between spouses. This can occur for a variety of reasons, such as adding a partner to the property title, removing a previous co-owner, or adjusting the ownership structure after separation or divorce. Transfers may also happen to meet refinancing requirements, or in cases where survivorship rights apply, allowing one party to gain sole ownership following the death of a joint title holder.
In Ontario, land transfer tax generally applies to all property transfers based on the value of the consideration. However, transfers between spouses or ex-spouses are typically exempt from this tax. According to Regulation 696 R.S.O. 1990, made under the Land Transfer Tax Act, transfers done out of “natural love and affection” where no money changes hands, or when the only consideration is the assumption of a mortgage, are exempt from the tax. But if one spouse is effectively purchasing an interest in the property, the land transfer tax will apply.
For land transfer tax purposes, the term “spouse” is defined as either:
- Two individuals who are legally married, or
- Two individuals who are not married but have lived together continuously for at least three years, or
- Two individuals in a relationship of some permanence, provided they are the natural or adoptive parents of a child.
Additionally, the Land Transfer Tax Act offers an exemption for transfers between former spouses if they are made in accordance with a written separation agreement, where the parties agree to live separately. In these cases, any financial payments made to a former spouse, as outlined in the agreement, are also exempt from the land transfer tax.
We’re here to guide you through the title transfer process between spouses and ensure everything goes smoothly. Reach out to us today for assistance!
