Date of Marriage Property: What Gets Deducted in Ontario?

Many people come into a marriage with a house, savings or a business, and want to know whether those assets are protected if the marriage ends. Ontario gives some protection through a date-of-marriage deduction, but there is a major exception for the family home.

This article explains how the deduction works, why a home you owned before marriage is treated differently, and how gifts and inheritances fit in.

How the deduction works

Equalization is based on net family property. That is the value of all property a spouse owns on the valuation date, except excluded property. From that value you deduct the spouse's debts and other liabilities, and the net value of property, other than a matrimonial home, that the spouse owned on the date of marriage.

In plain terms, the growth in value of what you owned before marriage is generally shared, but the value you brought in is not. If net family property comes to less than zero, it is deemed to be zero.

Property is defined broadly as any present or future, vested or contingent interest in real or personal property, so savings, shares and other assets can all be involved.

The special rule for a home owned before marriage

No date-of-marriage deduction is allowed for a property that is a matrimonial home. Debts tied directly to buying or significantly improving a matrimonial home are also not netted against the date-of-marriage deduction. Ontario.ca explains that the family home's full value is shared even if one spouse owned it before the marriage.

A matrimonial home is any property in which a spouse has an interest and that is or was ordinarily occupied by the spouses as their family residence. If they have separated, this is judged at the time of separation. A couple can have more than one matrimonial home.

Whether a cottage or second property is a matrimonial home depends on the facts, including whether it was ordinarily occupied as a family residence at separation.

Gifts and inheritances

Property acquired by gift or inheritance from a third person after the date of marriage is excluded from net family property. The exclusion does not apply to a matrimonial home. Gifts between spouses are not excluded, because only gifts and inheritances from a third person are covered.

Excluded property can stay excluded when it can be traced into other property, but not into a matrimonial home. A gift or inheritance used to buy or pay down the family home loses its protection. Income from gifted or inherited property is excluded only if the donor or testator expressly stated that it is to be excluded.

Damages for personal injuries, proceeds of a life insurance policy, and property the spouses agreed by domestic contract to exclude are also excluded.

Proving your deduction

The spouse claiming a deduction or exclusion, such as a date-of-marriage deduction, gift or inheritance, has the onus of proving it. In practice, that means records matter. Each party must also serve and file a sworn statement of property, debts and other liabilities that covers the date of marriage, the valuation date and the date of the statement, with the claimed deductions and exclusions.

The valuation date is the earliest of five dates, the first being separation with no reasonable prospect of resuming cohabitation.

What to do next

• List what you owned and owed on the date of marriage, and find statements, deeds or appraisals from around that time.
• Identify any home you owned before marriage and whether it became the family residence.
• Keep records of gifts and inheritances and how the money was used.
• Check for a marriage contract or other domestic contract that deals with property, since it may change the result.
• Speak with a family lawyer or accountant before relying on any deduction.

Frequently asked questions