- Is land transfer tax payable when land is transferred from one spouse to another due to a separation?
- My spouse and I are buying our first home together. I have owned a home before, but sold it before we became spouses. My spouse has never owned a home. Does she qualify for the First-time Homebuyers Refund?
- My partner and I are buying a home together. I have owned a home, but he has not. Does he qualify for the First-Time Homebuyers Refund?
- If, for mortgage purposes, a bank requires that a parent also be on legal title to a child's property, will the child have to pay land transfer tax when the parent later conveys legal title to the child?
- What is the value of the consideration where a parent transfers a half interest in property to the child, and there is a mortgage on the property?
- Are "minutes of settlement" acceptable as a written separation agreement?
- Are conveyances of land between family members subject to land transfer tax?
Is land transfer tax payable when land is transferred from one spouse to another due to a separation?
Not all transfers of land between spouses and former spouses are exempt from land transfer tax; to be exempt, the transfer must fall within one of the three situations described in Regulation 696 of the Land Transfer Tax Act:
- the only consideration given is the assumption of any encumbrance registered on the land, such as a mortgage,
- the transfer is in compliance with a written agreement of separation, pursuant to which the parties have agreed to live separate and apart, or
- the transfer is compliance with a court order.
If one spouse is paying the other spouse for their interest in the land in addition to assuming any mortgage, this transaction would not fit the first description.
For the second situation to apply, please note that the separation agreement MUST be in writing, and must provide that the parties have agreed to live separate and apart.
For land transfer tax purposes, "spouse" means either of two persons who are married to each other, or who are not married to each other and who have cohabited:
- continuously for a period of not less than three years; or
- in a relationship of some permanence, if they are the natural or adoptive parents of a child.
My spouse and I are buying our first home together. I have owned a home before, but sold it before we became spouses. My spouse has never owned a home. Does she qualify for the First-time Homebuyers Refund?
Yes, even though you are not a first-time homebuyer, your spouse may claim a refund up to the maximum, as long as you did not own a home while you were each others "spouse."
Where a husband who is not a first-time purchaser and a wife who is a first-time purchaser, purchase a home together, the wife may claim the land transfer tax refund with respect to her interest. The wife may also claim a refund of land transfer tax with respect to her husband's interest, if he sold his interest in all homes that he previously owned before becoming her spouse.
For land transfer tax purposes, "spouse" means either of two persons who are married to each other, or who are not married to each other and who have cohabited:
- continuously for a period of not less than three years; or
- in a relationship of some permanence, if they are the natural or adoptive parents of a child.
My partner and I are buying a home together. I have owned a home, but he has not. Does he qualify for the First-Time Homebuyers Refund?
Your partner's eligibility for a refund depends on whether you are "spouses" as defined in section 29 of the Family Law Act.
For land transfer tax purposes, "spouse" means either of two persons who are married to each other, or who are not married to each other and who have cohabited:
- continuously for a period of not less than three years; or
- in a relationship of some permanence, if they are the natural or adoptive parents of a child.
If you are not spouses, then your partner may claim a refund based on his/her interest acquired in the home.
If you are "spouses", your partner may claim a refund up to the maximum, as long as you did not own a home while you were each other's "spouse." If you did own the home while you were each other's "spouse", then your partner does not qualify for a refund even if you did not live in the house together.
If, for mortgage purposes, a bank requires that a parent also be on legal title to a child's property, will the child have to pay land transfer tax when the parent later conveys legal title to the child?
If the parent did not acquire a beneficial interest in the property as a result of the conveyance, the ministry may accept the fact that the parent was on title as a trustee for the child. If satisfactory evidence is submitted to prove the existence of a trust, the conveyance of legal title from the parent to the child will not be subject to land transfer tax as it is a conveyance from trustee to beneficial owner.
For further information refer to Ontario Tax Bulletin LTT 1-2005 – Conveyances Involving Trusts.
What is the value of the consideration where a parent transfers a half interest in property to the child, and there is a mortgage on the property?
The value of the consideration will include one half of the principal balance still owing under the mortgage, plus any other consideration that the child gives to the parent.
For further information refer to Ontario Tax Bulletin LTT 10-2000 – Transactions for Nominal Consideration.
Are "minutes of settlement" acceptable as a written separation agreement?
Yes. Minutes of settlement are acceptable as a written separation agreement if, in that document, the parties have agreed to live separate and apart.
Are conveyances of land between family members subject to land transfer tax?
With the exception of specific exemptions for certain conveyances between spouses, as set out in Regulation 696 of the Land Transfer Tax Act, and involving family businesses and family farms as set out in Regulation 697 of the Land Transfer Tax Act, all conveyances between family members are subject to the same land transfer tax liabilities as conveyances between non-family members.
