Do I have to pay land transfer tax when transferring property to a family member?
Ontario land transfer tax is triggered by a transfer of land, so even transfers between family members can attract LTT — whether or not money changes hands. The tax is calculated on the "value of the consideration," which includes not just the purchase price but also mortgages being assumed or other benefits received.
There are limited exemptions. One important one covers transfers between spouses (or same-sex partners) in certain circumstances, such as transferring the matrimonial home to a spouse without payment. However, if the transferee spouse is also assuming an existing mortgage, the outstanding mortgage balance may still be treated as consideration and attract LTT.
Transfers as gifts, inheritances through a will, or reorganizations of family corporations each have different rules and potential exemptions. The rules are technical, and the cost of getting them wrong can be significant. Always have a lawyer review any proposed property transfer between family members before it is completed.
Key takeaways
- Family transfers are not automatically exempt from Ontario LTT.
- A specific exemption may apply to spousal transfers in some circumstances.
- Assumed mortgages can still form part of the taxable consideration.
- Have a lawyer analyze any intra-family transfer before registering it.