Life Lease Exemptions

Bulletin LTT 1-2004
Published: April 2004
Content last reviewed: April 2012
ISBN: 0-7794-5731-5 (Print), 0-7794-5732-3 (PDF)

  • This bulletin provides highlights of the requirements to qualify and apply for the land transfer tax exemption for certain transfers of life lease interests as provided for in Ontario Regulation 88/04 (Regulation 88/04).
  • This bulletin provides general information. It is not exhaustive and should not be considered a substitute for the Land Transfer Tax Act (Act) and its regulations.

General

Introduction

Regulation 88/04 provides for an exemption from the payment of land transfer tax for transfers of life lease interests under certain conditions.

The definitions of "life lease development," "life lease interest,” “non-profit organization,” “registered charity” and “spouse” may be found at the end of this bulletin.

Requirements to Qualify for the Exemption

Acquisition of a Life Lease Interest

The acquisition by an individual or individuals of a life lease interest is exempt from tax where:

  • the owner of the life lease development is a non-profit organization or a registered charity and
  • each transferee is acquiring the life lease interest in order to use the unit as his or her principal residence or as the principal residence of the transferee’s parent or spouse.

Reversion of a Life Lease Interest

The reversion of a life lease interest in a unit in a life lease development to the owner of the life lease development is exempt from tax where:

  • the owner of the life lease development is a non-profit organization or a registered charity
  • the reversion occurs pursuant to the terms of the agreement under which the life lease interest in the unit was originally acquired and
  • the reversion occurs for the purpose of enabling the owner of the life lease development to sell the life lease interest to another purchaser.

Other Transactions Involving a Life Lease Interest

As Regulation 88/04 deals only with the acquisition or reversion of a life lease interest, any type of transaction involving a life lease interest that does not meet the criteria is subject to land transfer tax.

For example, when a life lease development is converted into a condominium, an exchange of the life lease interest for the ownership interest of the same unit in the condominium will be subject to land transfer tax.

Claiming the Land Transfer Tax Exemption – Electronic Registrations

Electronic Registrations

The exemption may be claimed by selecting the appropriate statement located under the Exemption tab of the land transfer tax section in the Teraview electronic land registration system.

Acquisition of Life Lease Interest

To claim the exemption on the acquisition of a life lease interest, Statement 9124 under the Exemption tab must be selected:

9124

This conveyance qualifies for an exemption from tax pursuant to Ontario Regulation 88/04 as it is an acquisition of a life lease interest where: 1) the owner of the life lease development is a non-profit organization or a registered charity; and 2) each transferee is acquiring the life lease interest in order to use the unit as his or her principal residence or as the principal residence of the transferee’s parent or spouse.

Reversion of a Life Lease Interest

To claim the exemption on the reversion of a life lease interest back to the owner of the life lease development, Statement 9125 under the Exemption tab must be selected:

9125

This conveyance is a reversion of a life lease interest to the owner of a life lease development, as defined. The reversion is occurring pursuant to the terms of the original agreement enabling the owner of the life lease development to re-sell the life lease interest to another purchaser. The owner of the life lease development is either a non-profit organization or a registered charity. This conveyance is exempt from tax pursuant to Regulation 88/04.

Claiming the Land Transfer Tax Exemption – Paper Registrations

Paper Registrations

To register a conveyance without the payment of tax, the value of the consideration must be shown on the Land Transfer Tax Affidavit [PDF - 378 KB], which is attached to the conveyance. One of the following explanations must be included in section 5 under the heading, “Other remarks and explanations, if necessary:”

Acquisition of Life Lease Interest

To claim an exemption on the acquisition of a life lease interest:

“This acquisition of a life lease interest qualifies for an exemption of tax pursuant to section 2 of Ontario Regulation 88/04”.

Reversion of a Life Lease Interest

To claim an exemption on the reversion of a life lease interest:

“This reversion of a life lease interest qualifies for an exemption of tax pursuant to section 3 of Ontario Regulation 88/04”.

Claiming the Land Transfer Tax Exemption – Unregistered Dispositions

Unregistered Disposition

An unregistered disposition occurs when notice of a transfer of an interest in land is not registered on title within 30 days of the transfer.

Requirement to File a Return

The exemption on the acquisition or reversion of a life lease interest is available by way of an unregistered disposition under section 3 of the Act. Subsection 5(7) of the Act requires every person liable to pay tax under section 3 to deliver a Return on the Acquisition of a Beneficial Interest in Land [PDF - 811 KB] to the Minister of Finance within 30 days of the date of disposition, notwithstanding that an exemption may apply.

Acquisition of a Life Lease Interest

In the case of an acquisition of a life lease unit, along with the Return, the following must be submitted to the Ministry of Finance (ministry) at the address set out at the end of this bulletin:

  1. A photocopy of all agreements between the parties relating to the purchase of the life lease unit.
  2. An affidavit by the transferee(s) that includes the statement, “This acquisition of a life lease interest qualifies for an exemption of tax pursuant to section 2 of Ontario Regulation 88/04.”

Reversion of a Life Lease Interest

In the case of a reversion of a life lease unit, along with the Return, the following must be submitted to the ministry at the address set out at the end of this bulletin:

  1. A photocopy of all agreements between the parties relating to the reversion of the life lease unit.
  2. An affidavit by the transferee that includes the statement, “This reversion of a life lease interest qualifies for an exemption of tax pursuant to section 3 of Ontario Regulation 88/04.”

Claiming a Refund of Land Transfer Tax Paid

Limitations on Applying for a Refund

A refund is available for land transfer tax that was paid to acquire a life lease interest as long as the qualifications of Regulation 88/04 are met. A refund request must be received by the ministry within four years from the date the payment of tax was made.

Documentation Required

The following documentation must be included with the submission:

  1. An affidavit by the transferee(s) that includes one of the following statements:
  1. “This acquisition of a life lease interest qualifies for an exemption of tax pursuant to section 2 of Ontario Regulation 88/04” or
  2. “This reversion of a life lease interest qualifies for an exemption of tax pursuant to section 3 of Ontario Regulation 88/04.”
  1. A photocopy of all agreements between the parties that relate to the purchase of the life lease unit.
  2. A copy of evidence that land transfer tax was paid:
  1. In the case of an electronically registered conveyance, a copy of the docket summary showing the amount of land transfer tax paid.
  2. In the case of a paper registered conveyance, a photocopy of the Land Registry Office’s original Transfer showing the amount of land transfer tax paid.
  3. In the case of an unregistered disposition, details on when the payment was made.

Once the above documentation has been received, the ministry may request further information or documentation.

Forward your request for a refund to the ministry, along with the required documentation, to the address set out at the end of this bulletin.

Definitions Under the Act and Regulation 88/04

Life lease development means land with self-contained units, organized as what is commonly known as a life lease project, where the right to occupy a unit is solely for the lifetime of an individual or for a term of at least 20 years.

Life lease interest means the exclusive right to occupy a unit in a life lease development.

Non-profit organization means a non-profit organization within the meaning of paragraph 149(1)(l) of the Income Tax Act (Canada) and includes a municipality.

Registered charity means a charitable organization registered under subsection 248(1) of the Income Tax Act (Canada).

Spouse means spouse as defined in section 29 of the Family Law Act. Currently, a “spouse” is either of two persons who are married to each other, or who are not married to each other and who have cohabited,

  1. continuously for a period of not less than three years, or
  2. in a relationship of some permanence, if they are the natural or adoptive parents of a child.

Additional Information

If this bulletin does not completely address your particular situation, refer to the Act and related regulations, visit our website at ontario.ca/finance or contact:

Ministry of Finance
Audit Branch
33 King Street West
PO Box 625
Oshawa ON  L1H 8H9

  • 1 866 ONT-TAXS (1 866 668-8297)
  • Fax: 905 433-5770
  • 1 800 263-7776 for teletypewriter (TTY)

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