Property Title Transfer in Ontario After a Divorce or Separation

After a separation, one spouse often wants to keep the home and take the other off title. That means a transfer registered on title, and usually a buyout. Several legal rules can apply at once.

This article walks through the usual consents, documents and tax points in Ontario. It is general information, and a lawyer can tell you how it applies to your facts.

Why you cannot simply sign the other spouse off

Both spouses have an equal right to possession of a matrimonial home, whoever is on title. A matrimonial home is property a spouse has an interest in that the spouses ordinarily occupy as their family residence, or did at separation.

No spouse may dispose of or encumber an interest in a matrimonial home unless the other spouse joins in or consents, has released their rights in a separation agreement, or a court order authorizes it. A transaction that breaks this rule may be set aside. A court can also order exclusive possession of a home regardless of who owns it.

If a spouse has no ownership interest, their possession right is personal and ends when they stop being spouses, unless an agreement or order says otherwise.

Documents that usually support the transfer

• A written separation agreement in which the departing spouse releases their rights in the home and agrees to transfer title.
• Or a court order authorizing the transfer.
• A transfer (deed) registered electronically through Teraview by an authorized account holder, usually your lawyer.
• Mortgage documents, since land transfer tax is calculated on liabilities the new owner assumes, such as a mortgage.
• Payment details for any buyout, because consideration affects tax.

If you are not married, the matrimonial home rules do not apply in the same way, and a partner who contributed to a property may have a claim that could require going to court. Get advice before you rely on title alone.

Land transfer tax and income tax

Land transfer tax is normally calculated on the amount paid for the land, including a mortgage the transferee assumes. For spouses and former spouses, a transfer is exempt where the only consideration is assuming a registered mortgage, or where it is made under a written separation agreement or a court order.

A buyout paid in some other way may not fit the exemption, because the Act counts any benefit of whatever kind conferred as part of the arrangement. Ask your lawyer how the payment should be structured and documented.

On the income tax side, capital property transferred to a spouse or common-law partner who is resident in Canada is generally deemed transferred at cost, and the transferor can elect out on their return. If a home that was your principal residence is sold, or considered sold, you must report it and designate the property on Schedule 3 to claim the principal residence exemption.

Sharing property and time limits

On marriage breakdown, the full value of the family home must be shared, even if one spouse owned it before the marriage or received it as a gift or inheritance. Equalization claims must be made within six years of separation or two years of divorce, whichever comes first.

If co-owners cannot agree, any person interested in the land may apply to court for partition or sale. That is usually a last resort after negotiation.

What to do next

• Get a current parcel register to confirm who is on title.
• Note the date of separation, because equalization deadlines run from it.
• Collect mortgage statements and ask the lender about its requirements.
• Obtain independent legal advice before signing any separation agreement.
• Ask your lawyer whether the transfer fits the land transfer tax exemption.
• Ask an accountant about capital gains and the principal residence designation.

Frequently asked questions