Sharing the Matrimonial Home on Separation

You may have to share 100% of the value of a home you owned alone before marriage.

This is the second in a three part series on matrimonial homes.  This series provides information on (1) what a matrimonial home is and some special rules, (2) how a matrimonial home is treated in the equalization process, and (3) exclusive possession of a matrimonial home.

How is property normally treated upon separation?

Very generally speaking, when a couple separates, they share in the increase of their net worth over the course of the marriage, with some exceptions. This is called your net family property. The basic formula is your total assets on the date of separation, minus your total debts, minus your excluded property and the net value of your property on the date of marriage.

How is a matrimonial home treated differently?

The matrimonial home is one of the most significant exceptions in the equalization process, because you may not receive a “date of marriage deduction” for the matrimonial home.  

If you own your matrimonial home on the date of marriage, and you still own the same home and it is still your matrimonial home on the date of separation, you do not share only the increase in its value.  You share the entire value of the house.

This means that when you subtract the net value of your property on the date of marriage, you do not subtract the equity in the matrimonial home.

However, this exception will not apply if you no longer own the home on the date of separation, or it is no longer a matrimonial home, as the definition is restricted to the home or homes you ordinarily occupy at the time of separation.

This special treatment of can make a significant difference in the equalization payment.

How can you protect your investment?

Many couples choose to enter a “Marriage Contract” (also known as a prenuptial agreement) setting out their agreement that the spouse who brought the home into the marriage will be entitled to a “date of marriage deduction” if they separate, regardless of where they live on the date of separation. In Ontario, a Marriage Contract can be signed at any time before or during the relationship.

Even if you do not sell your home during the marriage, the exception may also not apply if you have a signed an agreement that states this.  If you are bringing a home into your marriage, it is important to consider whether you should enter into such an agreement to protect your investment.