Offices in Ottawa and Perth
(613) 722-1500

CONTACT US (613) 722-1500

Adding or Removing Someone From Title – Do I Need to Pay Land Transfer Tax?

Adding or Removing Someone From Title – Do I Need to Pay Land Transfer Tax?

By:

Mann Lawyers

Posted August 26, 2021

Whether or not land transfer tax applies in a transaction can be a very fact specific determination. In a “normal” purchase or sale where the seller is transferring their full interest in the property to the purchaser for consideration, land transfer tax usually applies. However, what happens in situations where you are adding or removing someone from title? The answer is not so simple.

Spouses

Adding or removing a spouse from title may not trigger land transfer tax. The Land Transfer Tax Act (the “Act”) allows spouses to transfer between each other for “natural love and affection” when there is no money passing between the spouses or if the only consideration passing is the assumption of a mortgage. If one spouse is truly buying an interest in the property, however, there will be land transfer tax payable.

For land transfer tax purposes, a “spouse” includes two persons who are:

  1. legally married, or
  2. who are not married, and
    1. have cohabited for at least three years
    2. are in a relationship of some permanence, if they are the natural and adoptive parents of a child.

The Act also provides an exemption of land transfer tax for transfers between former spouses, in accordance with a written separation agreement wherein the parties have agreed to live separate and apart. In this circumstance, money can be paid to an ex-spouse as specified in the separation agreement without being required to pay land transfer tax.

Family and Friends

Transfers between family members and friends often trigger land transfer tax. When there is a mortgage on title, or where funds are being paid to acquire an interest in the property, there is no exemption for family transfers and land transfer tax will be required.

However, if there is no mortgage on title and the property is gifted to a friend or family member, land transfer tax will not be payable because the consideration for the transfer will be $0. Further, if a parent is put on title as a trustee in order for their child to qualify for a mortgage, the transfer can be done for $0, making the land transfer tax $0, as long as evidence of the trust relationship is submitted to the Ministry of Finance. It is important to fully explain your situation to your real estate lawyer so that they can determine whether land transfer tax is payable in your circumstances.

First-Time Homebuyers

If you are acquiring property and land transfer tax is payable, you may be able to qualify for a rebate if you have never owned a home anywhere in the world. If you have a spouse who has owned a home while you were married, you will not be eligible. If you qualify, the amount of your rebate will be dependent on the portion of property you are obtaining and the purchase price; and should be discussed with your real estate lawyer. For more information on the first-time homebuyer rebate, please see my colleague Stephanie Simard’s blog.

The above examples do not provide an exhaustive list of the types of transfers that will not trigger land transfer tax. If you are looking for information on the land transfer tax implications when changing the legal tenure of your property, please see my last blog. There are also further exemptions for transferring family farmland, transfers between estates and beneficiaries, etc. which are beyond the scope of this blog. This blog also does not cover the complexities of trust scenarios.

Please note that depending on whether or not you live in the property, you may wish to speak with an accountant regarding any income tax implications when disposing of your interest in a property.

This blog post was written by Colleen Rhodes, a member of the Real Estate team.  She can be reached at 613-369-0369 or at colleen.rhodes@mannlawyers.com.

More Resources

Blog |
Employment, Labour, and Human Rights, Commercial Litigation

By: 

Posted May 23, 2023

Both in my commercial and employment litigation practice, I encounter Ontario business owners faced with serious charges laid against them under the Provincial Offences Act[...]
Blog |
Family Law

By: 

Posted May 18, 2023

The recent Supreme Court of Canada decision in Anderson v. Anderson, 2023 SCC 13, provides guidance on domestic contracts and the enforceability of an informal[...]
Blog |
Environmental Law

By: 

Posted May 16, 2023

When many people think of contaminated sites, they think of the usual suspects such as industrial properties and gas stations.  They may not think of[...]
Blog |
Business Law

By: 

Posted May 9, 2023

Often business owners reach a point where they are considering the sale of their business either through the sale of shares or the sale of[...]
Blog |
Family Law

By: 

Posted May 2, 2023

Overview of Tort Claims in Family Matters Tort claims can be made in family law matters, so as to prevent a multiplicity of proceedings and[...]
Blog |
Employment, Labour, and Human Rights

By: 

Posted April 25, 2023

In a case that recently was decided from the Court of Appeal of Ontario called Celestini v Shoplogix Inc., 2023 ONCA 131, the Court had[...]

Subscribe to Our Newsletter

"*" indicates required fields

Name*
Consent*
This field is for validation purposes and should be left unchanged.