In Ontario, changing who owns a property—whether by adding a spouse, removing a former partner, or gifting a share to a child—is not as straightforward as it sounds. You can’t simply “add someone to title” or “take someone off.” From a legal and tax perspective, every change is considered a property transfer, and it often comes with Land Transfer Tax (LTT) and other legal consequences.
Here’s a deep dive into how title transfers actually work, and what homeowners should be aware of.
1. Adding or Removing Someone From Title Is Always a Legal Transfer
Anytime someone is added to or removed from the title of a property, it is legally viewed as a transfer of ownership—regardless of whether money changes hands. This triggers the legal requirement to:
- Hire a real estate lawyer to prepare and register the transfer.
- Pay Land Transfer Tax unless you qualify for an exemption.
This applies even in cases where:
- You’re “gifting” property to a family member.
- You’re adding a child to help them qualify for a mortgage.
- You’re removing someone after a relationship ends.
🛑 Exception: If two people own a property as joint tenants, and one of them passes away, the surviving owner automatically assumes full ownership without triggering Land Transfer Tax.
2. You Can’t Gift Property With a Mortgage Without Paying Tax
In Ontario, gifting property is not tax-free if there’s still a mortgage on the home—even if you’re transferring it to a close family member.
Why?
Because Land Transfer Tax is based on the “consideration” of the transfer. If the person receiving the gift is also assuming part of the mortgage, the government treats that mortgage value as if it were payment.
Example:
Imagine you want to transfer 50% ownership of your home to your adult child. The property is worth $800,000 and there’s a $400,000 mortgage remaining.
Even though your child is paying you $0, the government considers them to be assuming $200,000 of the mortgage debt—and Land Transfer Tax will be charged on that amount.
If there’s no mortgage, and the transfer is truly for $0, then Land Transfer Tax may not apply—but a lawyer must still process it properly.
3. Spousal Transfers Are Usually Exempt from Land Transfer Tax
There is one big exception to the rules: spousal transfers.
You can transfer ownership of a home between legal spouses or common-law partners tax-free, even if there is a mortgage on the property. This includes:
- Adding your spouse to title after marriage.
- Transferring title during separation or divorce (with a proper separation agreement).
- Moving title into one spouse’s name for estate planning or refinancing purposes.
To qualify, the transfer must fall under the spousal exemption rules, and it must be documented appropriately by a lawyer.
4. Trust Relationships and Temporary Ownership
Sometimes, a friend or family member is added to title purely to help qualify for a mortgage—perhaps because they have stronger credit. In these cases, it’s possible to structure the arrangement as a trust.
If the person added to title did not contribute any money toward the purchase and was holding the property in trust, they can later transfer the property back to the actual owner without Land Transfer Tax, as long as the trust was properly documented from the start.
However, trust arrangements must be declared in writing (often through a “bare trust” or statutory declaration), and professional legal advice is essential to ensure you don’t face tax penalties later.
5. Estate and Inheritance Transfers
If a property is inherited from someone who passes away, the rules are a bit different:
- If a joint tenant dies, the surviving joint owner receives full title automatically, with no Land Transfer Tax.
- If someone inherits property as the sole beneficiary under a will or intestate succession, no Land Transfer Tax is owed—even if there’s a mortgage.
- But if multiple beneficiaries are on title and some agree to give up their share to one person, Land Transfer Tax may apply to that redistribution.
These situations should always be reviewed with an estate lawyer to ensure tax exemptions are not missed.
6. Always Use a Real Estate Lawyer for Title Transfers
In Ontario, you must use a licensed real estate lawyer to handle any title transfer. This isn’t optional. Lawyers handle:
- Registration with Ontario’s land registry system
- Affidavits for tax exemption claims
- Preparation of trust declarations (if applicable)
- Reviewing mortgage implications
- Ensuring compliance with federal and provincial laws
✅ Summary: When Land Transfer Tax Applies
| Situation | Mortgage Owed? | Land Transfer Tax? |
|---|---|---|
| Add family member “as a gift” | Yes | ✅ Yes (on mortgage portion) |
| Add family member “as a gift” | No | ❌ Possibly exempt |
| Transfer between spouses | Yes or No | ❌ Exempt |
| Inheritance from joint tenant | Any | ❌ Exempt |
| Sole beneficiary inheritance | Any | ❌ Exempt |
| Remove co-owner during breakup | Yes | ✅ Often applies |
| Transfer to/from trustee (bare trust) | No contribution | ❌ May be exempt if documented |
Property ownership is a legal structure—changing it comes with financial, legal, and tax consequences. Whether you’re planning for the future, going through a separation, or helping a child become a homeowner, title transfers in Ontario are not a DIY task.
If you’re considering changing the name(s) on a property title, speak with a knowledgeable real estate lawyer first. They can help you avoid surprise taxes, ensure proper documentation, and protect your interests.