Land Transfer Tax Payable on Conveyance to Child



Is Land Transfer Tax payable upon the Transfer of a property to a child?


Sometimes “yes” and sometimes “no”.

If a conveyance is undertaken at full market value, LTT will be payable on the FMV. If the transfer is undertaken for “nominal consideration ($1)”, the LTT calculation will be nil.

Consideration includes the assumption of liabilities. So, if there is a $300,000.00 mortgage assumed by the child, then there will be LTT calculated on $300,000. There is a special exemption for spouses. There will be no LTT payable if there happens to be a mortgage.


The Act does not exempt gifts of land from land transfer tax. However, if on a conveyance there is no consideration passing in any form whatsoever (either directly or indirectly) between the parties, then no tax is payable. Since the rate of tax is applied to the “nil” value of the consideration, the resulting computed tax payable is also “nil”. The exception to this is where the Act deems the consideration passing to be the fair market value of the land such as transfers from a corporation to any of its shareholders or leases over 50 years.

For purposes of the Act, consideration includes the assumption of any liabilities. If there is an outstanding encumbrance on the lands, tax will be payable on the amount outstanding at the time of registration, regardless of the relationship between the parties (except for certain transfers between spouses or same-sex partners pursuant to Regulation 696, R.R.O. 1990). This amount of any liabilities assumed is be set out in paragraph 4(b)(i) of the Affidavit of Residence and of Value of the Consideration (LTT affidavit).

Where there is no consideration passing whatsoever, the consideration will be set out as “nil” in paragraph 4 of the LTT affidavit. The relationship between the parties (e.g. father to son, brother to sister, friend to friend) and the reason for the transfer are to be set out in paragraph 5 of the affidavit. Note gifts of land for “nil” consideration may occur between arms length parties, (e.g. individual to a charity). Paragraph 6 of the affidavit must be completed to show whether the land is subject to any encumbrance.

Where there is an unregistered disposition of a beneficial interest in land as a result of gift, the provisions of section 3 of the Act apply. In these cases the consideration will be determined in the same manner set out above. A return must be filed and the tax paid on the consideration.

Brian Madigan LL.B., Broker

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