GET IT IN WRITING- TRANSFERRING A MATRIMONIAL HOME WHEN SPOUSES SEPARATE
When a couple separates or divorces, the question often arises of who gets to keep the matrimonial home. In some cases, one spouse will purchase the interests of the other spouse in the property. In these cases, it is important to have a written separation agreement signed before the transfer takes place. Putting aside the numerous family law considerations for having a separation agreement, for real estate transfers, having a written separation agreement could allow the parties to avoid payment of Land Transfer Taxes upon the transfer from one spouse to the other.
With married spouses, one spouse can transfer an interest to the other spouse, often for no consideration other than “natural love and affection”. This is not often true with transfers between separating spouses, and not because there may be a lack of love and affection. As part of a matrimonial home transfer, there is often a payment to purchase the transferring spouse’s interests in the home, and perhaps also an assumption of that spouse’s share of the mortgage debt. These amounts are normally taxable in terms of Land Transfer Taxes.
With a written separation agreement, it is possible for the transferee spouse to claim an exemption from payment of Land Transfer Taxes. This can result in savings of thousands of dollars, and make the time and costs involved in having a proper separation agreement drafted a worthwhile investment.
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Patrick’s law practice encompasses both residential and commercial real estate transactions, including purchases, sales, mortgage refinancing, and estate transfers. As part of the team at the law firm Mills & Mills LLP, Patrick’s focus is on building lasting professional relationships and being a trusted legal advisor to his clients. He can be reached by email at patrick.shing@millsandmills.ca
