Is there land transfer tax when property is transferred between spouses for equalization in Ontario?

Ontario provides an exemption from provincial land transfer tax when real property is transferred between spouses (or former spouses) as part of a marriage breakdown settlement. This exemption applies to transfers made pursuant to a court order or a written separation agreement dealing with the division of property between spouses.

Without this exemption, a real estate transfer would normally trigger Ontario land transfer tax based on the value of the property — a significant cost. The marriage breakdown exemption eliminates this cost when the transfer is properly documented and structured.

To claim the exemption, the transfer must meet the requirements of the Land Transfer Tax Act and be accompanied by the proper statutory declarations at the time of registration. Municipal land transfer tax (which applies in the City of Toronto) has its own exemption for marriage breakdown transfers as well. Getting a real estate lawyer involved to register the transfer correctly ensures the exemption is properly claimed.