Buying or Selling a Home When Going Through a Divorce

Going through a divorce is emotionally heavy, financially complex, and time-consuming. When a home is involved—often the biggest asset—decisions about selling, buying, or keeping it can feel overwhelming. This guide gives you clear, practical steps grounded in Ontario law and Canadian tax rules, so you can move forward with confidence, clarity, and control.

First Principles: What “Matrimonial Home” Means in Ontario

Equal right of possession—regardless of whose name is on title

In Ontario, the matrimonial home has special legal status. Each spouse has an equal right to possess the home while married, and you cannot sell or mortgage it without your spouse’s written consent or a court order—even if only one spouse is on title. This is set out in Ontario’s Family Law Act.

When agreement breaks down: court-ordered sale

If you jointly own and cannot agree on what to do, the court can order a sale under Ontario’s Partition Act. It is a powerful, last-resort remedy when negotiations fail. 

Decide Your Direction: The Three Common Paths

1) Sell the home and split the proceeds

When it helps: clean break, neither party can afford the home alone, or the home’s equity is needed to settle finances.

Key steps:

• Get a realistic market value (CMA), align on listing prep, and agree—in writing—on price strategy, showing rules, and how offers will be handled.
  
  

• Use a lawyer-vetted protocol for disbursements on closing (mortgage payouts, real estate fees, agreed equalization, moving costs).
  
  

2) One spouse buys out the other (keep the home)

When it helps: children’s school stability, strong community ties, or one partner can comfortably qualify on their own.

Financing note: Canada’s “spousal (equity) buyout” programs allow a qualified borrower to refinance up to 95% loan-to-value when buying out the other spouse, with a separation agreement or court order documenting the terms. Availability and criteria are insurer/lender-specific.

3) Hold for a period, then sell (short-term co-ownership)

When it helps: you need time—e.g., to stabilize income, finish school terms, or ride out market conditions.

Cautions: spell out in your separation agreement who pays the mortgage, taxes, insurance, repairs, and how you will handle listing timing and minimum acceptable price later.

Taxes, Title Transfers, and Fees: What to Watch

Principal Residence Exemption during separation

Normally, spouses can only designate one principal residence per family unit per year for capital gains purposes. During a separation of at least 90 days, spouses can—subject to CRA rules—designate different principal residences for that year (and for certain subsequent years while living apart). This matters if one spouse keeps the home and the other buys elsewhere.

Land Transfer Tax on title changes

Not all transfers between spouses or former spouses are automatically tax-free. Ontario provides exemptions only in specific scenarios (for example, certain transfers under a separation agreement). Toronto’s Municipal Land Transfer Tax mirrors similar principles. Always confirm the exemption before you change the title.

Mortgage qualification after separation

Support obligations (received or paid) can affect debt-service ratios. Lender policies vary on how they treat child and spousal support, separation agreements, and buyout structures—especially at high loan-to-value. Work early with a mortgage professional who understands separation files and insurer programs.

If You Plan to Sell During Divorce

Make a written “listing protocol”

Agree (in your separation agreement or a lawyer-drafted addendum) on:

• Price and strategy: list price, review date, price-adjustment triggers.
  
  

• Showings: notice periods, lockbox access, privacy and safety rules.
  
  

• Offer handling: who must be present, how counters are approved, tie-break rules if you disagree.
  
  

• Proceeds: how closing funds are disbursed and where they are held pending final accounting.
  
  

Prepare the home without conflict

• Neutral staging and pre-listing repairs reduce days on market and minimise disputes.
  
  

• Set clear “use of space” and cleaning rules to avoid last-minute show-stoppers.
  
  

Keep documentation tight

• Provide buyers with a complete package: property disclosures, utility costs, any permits, and—if relevant—proof of spousal consent to avoid later challenges under the Family Law Act.

If You Plan to Keep the Home via a Spousal Buyout

Get your financing mapped before negotiating numbers

• Ask your mortgage professional for a buyout pre-approval using program rules (often up to 95% LTV).
  
  

• Ensure the separation agreement explicitly states the equity payout, debts to be cleared, and closing costs—lenders rely on this to advance funds.
  
  

Align title and tax issues with your lawyer

• Confirm whether your buyout transfer is exempt from Ontario (and Toronto, if applicable) land transfer taxes.
  
  

• Update insurance and beneficiary designations immediately after closing. 

If You Need to Buy a New Home Post-Separation

Get financially “clean” first

• Finalize (or at least document) support amounts and any joint debts you are responsible for.
  
  

• Keep a paper trail of down payment sources—especially if funds arise from the sale or buyout of the former matrimonial home.
  
  

Time your purchase with tax rules in mind

• If your ex is keeping the former home and you are buying another, the principal residence designation should be coordinated with your tax advisor once you’ve been separated 90+ days.

Rebuild credit, then right-size expectations

• Post-separation cash flow can change. Consider slightly more conservative affordability targets to leave room for new household costs and support obligations.

Safety, Privacy, and Practicalities

• Mail and deliveries: set up forwarding, and update addresses methodically.
  
  

• Utilities and subscriptions: cancel, transfer, or create new accounts as appropriate.
  
  

• Online listings and photos: if you have personal safety concerns, ask your agent to manage the photo set and public remarks accordingly (e.g., remove identifying personal items before photography).
  
  

• Kids’ routines: if children are involved, coordinate move-dates around school schedules and extracurriculars to reduce stress.
  
  

How to Keep Things Civil—and Moving

• Use professionals as buffers. Let your REALTOR®, lawyers, and mortgage brokers handle negotiation points that trigger conflict.
  
  

• Decide who speaks for what. One contact person per side avoids crossed wires.
  
  

• Set deadlines. Attach reasonable timelines to each decision (price changes, repair approvals, offer responses). If talks stall, remember that courts can ultimately order a sale.

Frequently Asked Questions

Can my spouse sell the house without telling me?

No—not if it is a matrimonial home. Spousal consent (or a court order) is required to sell or mortgage it. A sale without consent can be set aside by the court.

We are separated. Can we each claim a different principal residence for tax purposes?

Yes, in certain circumstances after living separate and apart for at least 90 days, spouses may designate different properties for that year, according to CRA guidance. Get personalised advice before you file.

Is there a way to refinance at more than 80% to buy out my spouse?

Often yes. Lender programs (commonly called spousal or equity buyouts) can allow financing up to 95% LTV, subject to insurer and lender rules, documentation, and qualification.

The Bottom Line

Selling, keeping, or buying a home during divorce is as much a process as it is a transaction. Start by understanding your rights around the matrimonial home, map your financing options early, coordinate tax designations with your advisor, and memorialise every decision in your separation agreement. With the right plan—and the right team—you can protect your interests, your credit, and your next chapter. 

Ready to Move Forward? Work With The Johnson Team

When you are navigating a separation, you need a steady hand, a clear plan, and professionals who will protect your interests at every step. The Johnson Team is one of the top-performing real estate teams in the Greater Toronto Area, led by Jeff and Liz Johnson, and trusted for unparalleled market knowledge, creative marketing, and client-first service. Whether you are selling the matrimonial home, arranging a spousal buyout, or purchasing your next place, we will coordinate with your lawyer, mortgage professional, and accountant to keep the process organised, private, and on-schedule.

Start your next chapter with clarity and confidence. Contact The Johnson Team or contact us today to speak with an agent and get a plan in place right away.