The "welcome tax", also known as the "property transfer tax", is an amount that a municipality must collect when a property located on its territory is transferred.  This tax was created to allow municipalities to tax real estate transactions on their territory to generate additional revenue. The new owner must then pay the transfer tax.  

In case of a separation, if you buy out your ex-spouse's share of the family home, you will have to pay a transfer tax, save from a few exceptions. If you inherit a property, you will also have to pay a welcome tax. A person who transfers their property may also be required to pay this tax. The transferee has 30 days to pay this obligation. After this deadline, interest will be added to the amount due.

In some cases, the new owner will not have to pay any welcome tax. The majority of these exemptions relate to transfers that take place between family members or transfers that do not involve a tangible change in control of the transferred property. Some examples are given below:

Direct transfer with ascendants (with parents or grandparents) / Direct transfer with descendants (with children or grandchildren)

If a grandmother decides to give her cottage to her grandson, the latter will not have to pay the transfer tax. However, caution is advised, because if the same grandson decides to give the cottage to his sister, the latter will be required to pay this tax.??

Transfer between spouses

There is an exemption when the transfer takes place between spouses, i.e. between spouses or persons in a civil union. In the case of a divorce, with certain exceptions, the transfer must be made before the dissolution of the marriage is made official, otherwise the transfer tax must be paid.

Common-law partners can also benefit from this exemption if they have lived together for a period of more than 12 months before the transfer. To avoid paying a welcome tax, the transfer must take place within 12 months of the end of the relationship.

 Transfer between a transferor and a company they control

There will be no transfer duty payable where the transfer of a property takes place between a person and a company controlled by that person. However, that person must hold more than 90% of the shares and voting rights in the company. 

Value under $5000
The law provides for an exemption from the welcome tax if the value of the property is less than $5000. Today, it is unlikely that anyone will buy a property worth less than this amount, but such a situation could arise, for example, in the case of a transfer of a piece of land between neighbours. 

Please contact your notary if you have any further questions. This information will be provided to you free of charge. You can also consult the Chambre des notaires du Québec’s website.

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