Land transfer tax is payable on every conveyance of land in Ontario unless a specific exemption applies. Consideration includes any mortgage the person taking title assumes, which means a transfer made as a gift can still attract tax where a mortgage is registered against the property.
A change to title also carries consequences beyond the tax. It can expose the property to a new owner's creditors, alter the principal residence exemption, and trigger a capital gain even where no money changes hands.
Foote Law acts on residential title transfers from its offices in Orangeville and Fergus and throughout Ontario.
Foote Law handles the full range of ownership changes, from the initial land transfer tax analysis through to registration:
Call Foote Law in Orangeville at (519) 940-8309 or in Fergus at (519) 772-6139. Foote Law serves clients in Orangeville, Fergus, Brampton, Shelburne, Alliston, Barrie, Owen Sound, Newmarket, Guelph, Centre Wellington, and throughout the Greater Toronto Area, in person and virtually.
Land transfer tax is calculated on the value of the consideration given for the transfer, not on the value of the property.
Consideration includes the assumption of any liability. Where the person taking title assumes a mortgage registered against the land, tax is payable on the balance outstanding at the time of registration, whatever the relationship between the parties.
Where no money passes and no mortgage is assumed, the consideration is nil and no land transfer tax is payable. The Ministry of Finance also takes the position that where multiple conveyances are registered and it is evident that one of the reasons is to reduce the tax, the tax is collected as though a single conveyance had been registered.
Transfers between spouses and former spouses are subject to land transfer tax unless a specific exemption applies. Regulation 696 under the Land Transfer Tax Act exempts a transfer that falls within one of three situations:
In every case the parties must be spouses or former spouses of each other. Spouse carries the meaning set out in section 29 of the Family Law Act, which reaches both married spouses and unmarried persons who have cohabited continuously for the required period.
Where one spouse pays the other for their interest in addition to assuming the mortgage, the transfer falls outside the first situation, and the exemption is not available on that basis.
Joint tenants hold equal interests in the whole of the property, and the arrangement carries a right of survivorship. On the death of one joint tenant, that interest passes automatically to the surviving owner, outside the estate and without probate.
Survivorship is not absolute. It does not operate where the joint tenancy has been severed before death, and a court may find that a joint owner added for convenience holds their share in trust for the estate rather than taking it beneficially.
Tenants in common hold distinct shares, which need not be equal, and there is no right of survivorship. On the death of one owner, that share forms part of the estate and passes under the will or under the Succession Law Reform Act where there is no will.
Severing a joint tenancy converts it into a tenancy in common.
The land transfer tax, the capital gain, the creditor exposure, and the effect on a later sale are all settled before a transfer is registered and not afterward.
Foote Law acts on residential title transfers from its offices in Orangeville and Fergus and throughout Ontario, in person and virtually.
