In Ontario, land transfer tax (LTT) is generally payable when real property is transferred, including transfers between spouses. However, certain inter-spousal transfers are exempt under the Land Transfer Tax Act, R.S.O. 1990, c. L.6, and Ontario Regulation 696.

This exemption applies to transfers where the consideration is natural love and affection and there is no outstanding mortgage on the property. Further, it is explained that if the only consideration given for a spousal transfer of real estate is the assumption of any encumbrance registered on the land, such as a mortgage, the transfer is exempt from LTT.

Fo separated spouses, the exemption still applies if the transfer is made under a written separation agreement, court order, or judgment, and the parties qualify as spouses or former spouses under section 29 of the Family Law Act.

In summary, No LTT is payable on a transfer between spouses for natural love and affection when there is no mortgage. If a mortgage exists and is the only encumbrance registered on the land, the transfer is still exempt from LTT. Ensure transfer documents clearly state the relationship of parties and basis for the exemption. If you have any questions pertaining to the above-mentioned points, please do not hesitate to contact Romena Pinto from our Real Estate Team.

Written by Preksha Mehta & Romena Pinto