Do I have to pay taxes on property received through the division of marital property in a divorce?

In general, no tax is imposed on property received through the division of marital property in a divorce.

Because the division of marital property is a division of joint property that the couple formed together during the marriage, it does not constitute a gift, so no gift tax arises.

In addition, because it does not constitute income under the Income Tax Act, income tax is likewise not imposed.

However, if you receive a transfer of ownership of real estate during the division of marital property, an acquisition tax, a local education tax, and a special rural development tax may be imposed under the Local Tax Act.

However, because such a transfer of real estate is regarded as part of a simple division of property, capital gains tax is not imposed.

According to recent case law, even if real estate held in each spouse's name is mutually transferred, this is not regarded as a transfer for consideration.

In addition, even if the party obligated to divide the property is relieved of that obligation as a result of the division, the economic benefit arising from this is not regarded as a 'transfer of assets accompanied by consideration' that is subject to capital gains tax.

The only tax that arises from the division of marital property in a divorce is certain local taxes associated with the transfer of real estate, and gift tax, income tax, and capital gains tax generally do not present a problem.