Buying out your spouse's share of the home in Ontario

To buy out your spouse's share of the home in Ontario, you agree on what the home is worth, work out what your spouse's interest is after the mortgage, fold that into the overall property settlement, and then refinance and take a transfer of title under a written separation agreement or a court order. Until the deal closes, both married spouses usually keep an equal right to live in the home, and neither can sell or mortgage it without the other's consent (Family Law Act, ss. 19 and 21).

How a buyout of the matrimonial home works, step by step

A buyout sits inside the larger property settlement explained on our property division page. Two sets of rules apply at once. Part II of the Family Law Act protects the family home itself: who may live there and whether it can be sold or mortgaged. Part I decides the money: the equalization of net family property. A buyout has to satisfy both.

Confirm it is a matrimonial home. A property is a matrimonial home if a spouse has an interest in it and it was ordinarily occupied by the spouses as their family residence at separation (s. 18(1)). There can be more than one. Our page on who keeps the matrimonial home explains why that label changes the calculation.
Get a value both of you accept. Rule 13(3.3) of the Family Law Rules requires each spouse in an Ontario property case to serve the Municipal Property Assessment Corporation assessment for real property they held on the valuation date. That assessment is prepared for property tax and is rarely the number a buyout uses. Most couples obtain one or two appraisals, or agree on a price after looking at sales of similar homes.
Work out the equity. Subtract the mortgage, any secured line of credit and the realistic cost of selling, if you agree to account for it. If title is in both names, each of you owns your share of that equity as property.
Fold it into equalization. The home is also part of each spouse's net family property on the valuation date. A matrimonial home gets no wedding-day deduction, and gift and inheritance exclusions do not apply to it (s. 4(1) and 4(2)). Our page on calculating net family property shows how the home's value enters the formula, so it is counted once and not twice.
Settle the net figure. The buyout price for your spouse's share and any equalization payment are usually combined into one number, with credits for things such as post-separation mortgage payments if you agree on them.
Arrange the financing. The lender has to approve a mortgage in your name alone that pays off the existing mortgage and funds the payment to your spouse.
Sign, transfer and register. The separation agreement, or a court order, should set the price, the closing date and who pays what. A real estate lawyer registers the transfer and the new mortgage.

Buyout, sale or court order: the options compared

Route	How it happens	Law that applies	Main risk
Negotiated buyout	Separation agreement sets price, credits and closing date	Family Law Act, ss. 2(10), 21(1)(b), 54 and 55	Financing falls through after you sign
Court-ordered transfer to one spouse	Order in an equalization case that the home be transferred or vested to satisfy the payment	s. 9(1)(d)(i)	Time and cost of a court case
Court-ordered sale	Order that the property be partitioned or sold	ss. 9(1)(d)(ii) and 10(1)(c); Partition Act, ss. 2 and 3	Neither spouse keeps the home
Exclusive possession first, buyout later	One spouse lives in the home under an order while the case proceeds	s. 24(1)(b) and (3)	Possession is not ownership; the home's value can change
Joint sale by agreement	Both list the home and split the proceeds as the agreement says	s. 21(1)(a)	Market timing and carrying costs

What changes the answer

Whose name is on title. If the home is in one spouse's name, the other spouse still has an equal right to possession while they are spouses (s. 19(1)), but that right is personal and ends when they cease to be spouses unless an agreement or order says otherwise (s. 19(2)). The buyout then is really an equalization settlement: the owner keeps the home and pays the equalization from other money. If both names are on title, each spouse owns a share of the home itself, so a rise or fall in value after separation is generally shared through ownership.
Consent to the new mortgage. No spouse may dispose of or encumber an interest in a matrimonial home unless the other spouse joins in or consents, has released those rights in a separation agreement, or a court has authorized it (s. 21(1)). A refinance before the agreement is signed usually needs your spouse's signature. If consent is withheld unreasonably, a court can authorize the transaction (s. 23(b)).
Exclusive possession while you negotiate. A court can give one spouse exclusive possession of the home for a set period and can order that spouse to make payments to the other (s. 24(1)(b) and (c)). The factors the court must consider include the children's best interests, the spouses' finances, any written agreement, the availability of other suitable and affordable accommodation, and any violence by a spouse against the other spouse or the children (s. 24(3)). Our page on exclusive possession of the matrimonial home explains how those orders work.
Land transfer tax. Ontario's Regulation 696 under the Land Transfer Tax Act treats a conveyance between spouses or former spouses as outside the tax where enough information shows that it follows a written agreement to live separate and apart, follows a court order, or that the only consideration apart from natural love and affection is taking over a registered mortgage (s. 1). In Toronto, the City's Municipal Land Transfer Tax under Toronto Municipal Code Chapter 760 applies in addition to the provincial tax, and its exempt transactions are defined in that chapter, so a Toronto transfer needs both checked.
Income tax on the transfer. Capital property transferred to a former spouse in settlement of rights arising out of the marriage generally moves at its tax cost, unless the transferor elects otherwise (Income Tax Act, s. 73(1) and (1.01)(b)). Whether a capital gain arises later on a sale depends on matters such as the principal residence rules, so speak to a tax professional.
A deadline is close. If you cannot agree, the equalization claim that gives the court power to order a transfer or sale must be started in time: generally within six years of separation or two years after a divorce (s. 7(3)). Our page on equalization deadlines covers the details.

A worked example

For example, suppose Priya and Jordan own a semi-detached house in Leslieville jointly. This is a hypothetical. Two appraisals put it at $1,250,000 and $1,310,000, and they settle on $1,280,000. The mortgage is $520,000, so the equity is $760,000, and each of them owns half: $380,000.

Priya wants to stay. Separately, the equalization calculation (which already counts each spouse's half of the home on the valuation date) shows that Jordan's net family property is higher because of his RRSPs, so Jordan owes Priya $45,000.

Priya owes Jordan $380,000 for his half of the house.
Jordan owes Priya $45,000 in equalization.
Net, Priya pays Jordan $335,000 on closing.

Priya needs a new mortgage of $520,000 plus $335,000, or $855,000, plus legal costs. If her lender approves only $750,000, the gap is $105,000. Options include Priya transferring some of her own RRSP savings to Jordan instead of cash for part of the price, if she has them, a later closing date, or a sale. If Jordan had paid the mortgage alone for a year after separation, they would need to agree whether he gets a credit for that. None of this is fixed by statute; it is negotiated.

Common mistakes in a home buyout

Counting the house twice. The home is already in each spouse's net family property. Paying for "half the house" and then running an equalization that ignores that fact can overpay one side.
Using the tax assessment as the price. The assessment is required disclosure under rule 13(3.3), not a market value.
Signing before the mortgage is approved. Make the agreement conditional on financing, or set out what happens if the financing fails.
Changing the locks or moving a new partner in. Both spouses have an equal right to possession until an agreement or order says otherwise (s. 19(1)). Self-help can lead to a motion and costs.
Refinancing without consent. An encumbrance made without consent can be set aside unless the lender took it for value, in good faith and without notice that it was a matrimonial home (s. 21(2) and s. 23(d)).
Forgetting the cost of selling. If the alternative is a sale, real estate commission and legal costs come off the top. Decide expressly whether the buyout price reflects that saving.

What to do this week

Pull the most recent mortgage statement and the MPAC assessment notice for the year of separation.
Ask a mortgage lender or broker for a written pre-approval on your income alone.
Agree with your spouse on one or two appraisers, or ask a lawyer to propose how to value the home.
Keep paying the mortgage, taxes and insurance, and keep a record of who pays what after separation.
Collect the documents for your financial disclosure, because the buyout cannot be priced without the whole picture.
Book a free consultation to test whether a buyout, a transfer or a sale fits your numbers.

Frequently asked questions

Do I have to buy my spouse out at today's value or the separation-date value?

Equalization uses values on the valuation date (s. 4(1)). If you own the home jointly, though, each of you owns a share of the property itself, so its current value usually matters for the buyout. How to handle the difference is a frequent negotiation point and worth advice.

Can my spouse force a sale if I want to keep the house?

A court can order a sale in an equalization or title case (ss. 9(1)(d)(ii) and 10(1)(c)), and joint owners can apply under the Partition Act (ss. 2 and 3). A court can also order the home transferred to one spouse to satisfy what is owed (s. 9(1)(d)(i)). Which order fits depends on the whole settlement and on whether the keeping spouse can pay.

Does my spouse have to sign anything for me to refinance?

Usually, yes, until the agreement is signed. Section 21(1) bars encumbering a matrimonial home without the other spouse joining in or consenting, unless they have released their rights in a separation agreement or a court has authorized it.

Is there land transfer tax when my spouse transfers their half to me?

Regulation 696 under the Land Transfer Tax Act exempts certain transfers between spouses or former spouses, including those made under a written separation agreement or a court order (s. 1). In Toronto, the City's separate municipal tax has its own exemption rules under Chapter 760. Your real estate lawyer confirms both on registration.

What if we are common-law partners?

The matrimonial home rules in Part II and equalization in Part I apply to married spouses. Common-law partners generally divide a home according to title and may have a trust or unjust enrichment claim. Joint owners can still use the Partition Act.

Can I stay in the house while we work it out?

Both married spouses have an equal right to possession (s. 19(1)). If living together is not workable, a court can grant one spouse exclusive possession for a period (s. 24). Our guide to selling or mortgaging the home without consent explains the protections that apply in the meantime.

How do I buy out my spouse's share of the matrimonial home in Ontario?