How Is the Value of the Matrimonial Home Determined in Ontario?

For many separating couples, the house is the biggest asset, so its value drives the equalization number. Spouses often disagree about what it is worth, and about whether anything should come off for the cost of selling.

This article explains how value fits into the equalization calculation, how disputes are usually approached, and what to ask about selling costs.

Where the home's value fits in

Net family property is the value of all property a spouse owns on the valuation date, except excluded property, less the spouse's debts and other liabilities and certain date-of-marriage deductions. Property is defined broadly as any present or future, vested or contingent interest in real or personal property.

The home is counted in that total. If one spouse owned it before the marriage, no date-of-marriage deduction is allowed for it, because it is a matrimonial home. The spouse with the lower net family property is then entitled to one-half of the difference.

The date that matters: the valuation date

The home is valued as of the valuation date, not necessarily today. The valuation date is the earliest of five dates: separation with no reasonable prospect of resuming cohabitation, the date a divorce is granted, the date the marriage is declared a nullity, the date a spouse starts a successful improvident-depletion application under s. 5(3), or the day before a spouse dies.

This matters because house prices move. Agreeing on the right date comes first, and then on what the home was worth on that date.

Appraisals and disagreements about value

The Family Law Act does not set a formula for valuing a house. In practice, spouses often obtain a written appraisal from a qualified appraiser, sometimes jointly and sometimes each their own. Valuation of property generally needs evidence rather than a rule of thumb.

If you still disagree, common steps include:

• Agreeing on one appraiser and sharing the cost.
• Each spouse getting an appraisal and negotiating between them.
• Asking a court to decide the value on the evidence if negotiation fails.

A spouse claiming a deduction or exclusion has the onus of proving it. A spouse who needs a document from someone who is not a party, such as a lender, may ask the court to order it produced, and the test is whether it would be unfair to go on with the case without it.

Selling costs and mortgage debt

Mortgage debt is a liability that is deducted when net family property is worked out. Debts tied directly to buying or significantly improving a matrimonial home are also not netted against the date-of-marriage deduction.

Whether anything is deducted for realtor fees, legal fees or other costs of selling is not something to assume. It depends on the facts, including whether the home is actually being sold, and a lawyer or accountant can tell you how it is likely to be treated in your case. The court has other tools too. It may order a payment, allow it in instalments or delay it for up to ten years to avoid hardship, and may order property transferred, partitioned or sold.

What to do next

Both spouses must disclose their finances. In an equalization application, each party must serve and file a sworn statement of property, debts and other liabilities, covering the date of marriage, the valuation date and the date of the statement. A party making a property claim must also serve and file a financial statement, which for property claims is Form 13.1. Supporting documents, including account and investment statements closest to the valuation date, are due within 30 days after the financial statement is due.

• Gather property tax bills, mortgage statements and purchase documents.
• Decide how you will obtain an appraisal as of the valuation date.
• Correct any disclosure document you find is wrong. You must promptly serve the corrected information.
• Ask a lawyer or accountant about selling costs and tax before you agree to a number.

Frequently asked questions