Sometimes, yes, and the deciding factor is usually the mortgage. Ontario charges land transfer tax on the "consideration" the new owner gives for the property. If you give your home to a family member with no payment and no mortgage attached, the tax is nil. If the family member takes over a mortgage, the tax applies to the part of the mortgage they take on.
Here's an example. Say a mother owns a home with a $400,000 mortgage and adds her adult daughter as a 50% owner. The daughter doesn't pay any cash, but she takes on half of the mortgage, which is $200,000. That $200,000 counts as consideration. The Ontario land transfer tax on $200,000 comes to about $1,725, and in Toronto, a matching municipal tax adds about another $1,725. This is an illustration using the standard rates, with no rebate applied, so your own numbers will differ.
This guide explains how the rules work, where exemptions may apply, and what else to check before you transfer.
How Ontario calculates tax on a family transfer
Land transfer tax doesn't depend on whether the buyer and seller are related. It depends on what the new owner gives in exchange. The Land Transfer Tax Act has no exemption for gifts of land as such. But if no consideration changes hands in any form, directly or indirectly, including a mortgage assumption, no tax is payable.
What counts as consideration
Consideration includes more than cash:
Money paid for the property
A mortgage or loan the new owner takes over. Under the Act, consideration also includes the assumption of any liabilities.
Other debts or obligations the new owner agrees to take on
The share of the property matters too. When a parent transfers a half interest to a child and there is a mortgage, the consideration includes half of the mortgage balance and accrued interest, plus anything else the child gives.
A gift with no mortgage
Take the reverse situation. A father owns his home outright, with no mortgage, and gives it to his son. The son pays nothing and takes on no debt. The transfer documents can state the consideration as "nil," which means the family member doesn't pay land transfer tax on the transfer. The tax is nil, and the transfer still goes through the usual registration steps.
Transfers between spouses
Ontario has a separate exemption that can apply to some transfers between spouses. One condition that can qualify is when the only consideration given is the assumption of an encumbrance registered on the land, such as a mortgage. The rules have conditions and details, so don't assume your transfer qualifies without checking. Your lawyer can confirm whether the exemption applies to your situation.
Toronto buyers pay a second tax
If the property is in Toronto, the city's municipal land transfer tax applies on top of the provincial tax. If the child assumes a mortgage on a gifted property, land transfer tax applies at both the Ontario and Toronto levels on the amount of the mortgage assumed. Outside Toronto, only the provincial tax applies. London, for example, has no municipal land transfer tax.
Family farms
Ontario has a special exemption for farmland. The Family Farm Transfer Exemption can fully exempt a transfer of farm property to a family member for farming purposes, and a family can use it once per generation. It has its own conditions and paperwork, so ask your lawyer early if the property is a working farm.
What the paperwork says
When your lawyer registers the transfer, a land transfer tax statement lists the consideration. That number has to be accurate. Any consideration you declare on the statements triggers tax unless an exemption applies. Your lawyer won't write "nil" if you're taking over a mortgage, because the statement must match the facts.
Land transfer tax is only one cost
Even when the tax is nil, a family transfer can create other issues:
Capital gains tax. If the property isn't your principal residence, transferring it can create a tax bill based on how much the home has risen in value. Talk to an accountant before you transfer.
Joint tax liability. Section 160 of the Income Tax Act can make both the person giving the property and the family member jointly liable for certain unpaid tax of the person who gave it.
Lender consent. If a mortgage is on the property, your lender may need to approve the change.
Legal and registration fees.
Creditor and family-law exposure. Once a family member is on title, their creditors or a future separation can affect the property. Our articles on adding a spouse to title and transferring property from a parent to a child cover these risks.
What to bring your lawyer
Your current ownership documents or a recent title record
Your mortgage statement, if there is one
The names of everyone who will be on title after the transfer
Your reason for the transfer, such as estate planning, helping a child, or a change in a relationship
The bottom line
A family transfer isn't automatically tax-free, and it isn't automatically taxed. The mortgage and what the new owner gives in exchange decide the land transfer tax. Check the numbers before you sign, because it's much easier to plan for the tax than to fix a mistake after registration.
Thinking about transferring property to a family member? Contact Darr Law, and we'll review your situation, explain whether land transfer tax applies, and walk you through the next steps.