If my parents gave us money for a down payment, does that reduce the equalization payment?

Money received as a gift from someone other than your spouse during the marriage can be excluded from your net family property — meaning it does not get shared in equalization. If your parents gifted you money and you used it for a down payment, that amount may qualify as an exclusion.

However, two important conditions apply. First, you must be able to trace the gift clearly: show the money came from your parents and went into the property. Second — and critically — if the gifted funds went into the matrimonial home (the home you lived in together), you cannot claim the exclusion for that amount. The matrimonial home rules prevent any deduction or exclusion based on how the home was acquired, unless a marriage contract says otherwise.

If the gift funded a different asset (an investment property, a TFSA, etc.) and was kept identifiable, the exclusion claim is much stronger. Documentation of gifts — a letter from the donor, banking records showing the transfer — helps establish traceability.