Does the Increase in Value of a Home Owned Before Marriage Get Shared?

You bought a home before you married, and it has gone up in value since. Now the marriage is ending and you are wondering whether your spouse gets a share of that increase, or whether the home is yours to keep out of the calculation.

The answer turns on one technical point: whether the home was a matrimonial home when you separated. This article explains how the date-of-marriage deduction works, why a matrimonial home is treated differently, and what can change the result.

How equalization works in plain terms

Ontario.ca explains that married couples generally split property acquired during the marriage equally when the marriage ends, and the money owed to the spouse with the smaller share is called an equalization payment. In practice, each spouse's net family property is worked out, and the difference is evened out.

Part of that exercise is giving each spouse credit for what they brought into the marriage. That credit is the date-of-marriage deduction. It is meant to keep a spouse from sharing the value of assets they owned before the relationship began. For a home, though, there is an important exception.

The matrimonial home exception

Under the Family Law Act, a spouse's marriage-date deduction covers property other than a matrimonial home that the spouse owned on the date of marriage. Whether your home counts as a matrimonial home depends on your situation, so it is worth confirming with a lawyer.

The result is that the timing of the home matters. If the home you brought into the marriage is still the matrimonial home at separation, its value on the date of marriage cannot be deducted. If it was sold before separation, that value is deductible.

This is why the question is not simply whether the increase in value is shared. When the home is still the matrimonial home, the deduction for what you brought in is not available, so the whole value, not only the growth, is part of your side of the calculation. Exactly how the numbers come out depends on your debts and other assets, so a lawyer or accountant can run them for you.

Why a gift or inheritance rule does not rescue the home

People often assume that a home they owned alone, or received from family, is protected. The rules say otherwise. Ontario.ca states that the family home must be divided equally unless the spouses agree to a different split, and that a family home that was gifted or inherited does not count as excluded property.

The statute's exclusions for gifts and inheritances received after marriage also apply to property other than a matrimonial home. The matrimonial home is treated as its own category in several places, which is why it is worth looking at your situation carefully rather than relying on general ideas about what is protected.

What can change the result

• A domestic contract. Spouses can vary the default rules by a domestic contract such as a cohabitation agreement or separation agreement. A marriage contract can also vary the marriage-date deduction rule for a home.
• Double counting. The Court of Appeal has held that the same property cannot be both an excluded item and a marriage-date deduction. Your lawyer or accountant should check that no asset is counted twice.
• Trust claims. Under the Family Law Act, trust claims such as constructive or resulting trust may be advanced prior to equalization. These are fact-specific.
• Unequal division. A court can order an unequal division only where equalization would be unconscionable. That is a high bar and not the usual outcome.

If you signed a marriage contract, it must be signed by both parties in front of a witness, and the witness must also sign. If you are unsure whether your document meets that standard, or whether it covers the home, that is worth confirming with a lawyer. A court may also set aside a domestic contract or part of it in certain situations, such as a failure to disclose significant assets or debts, or a party not understanding the nature or consequences of the contract.

Timing and practical steps

For married spouses, Ontario.ca gives the time limit for property claims as six years from the day of separation or two years from the day the divorce is final, whichever comes first. Do not wait to find out where you stand.

• Find the purchase documents and note the date you bought the home.
• Locate your marriage certificate or confirm the date of marriage.
• Gather any marriage contract, cohabitation agreement or separation agreement.
• Collect mortgage statements and any records of who paid what toward the home.
• Note whether the home was ever sold, or whether you still live in it or lived there as a family.
• Ask a lawyer or accountant how the home's value will be established, since appraisal and valuation questions depend on your facts.
• Write down the separation date and the divorce date, if any, so the time limits can be checked.

Frequently asked questions