Dividing the Family Home

The Family Property Act governs property division in Alberta. The presumption is that family property would be split equally. However, exemptions are common when one party has received gifts from third parties, inherited assets, received money from an insurance or settlement, or owned property prior to the relationship.

Exemptions in the family home are common when dividing family property. Often, one party will have contributed to the family home prior to the parties becoming a family unit (either by getting married or becomes adult interdependent partners (“AIPS”)). That amount that they contributed prior to the marriage is considered exempt, meaning that the amount the party contributed prior to marriage should be removed from the family property that is being divided. The exemption in the family home may be split in half if the home is put into the name of the other party.

Example: How the Family Home Exemption Can Be Split

• Person A owns a home worth $200,000 before marrying Person B.
• Person A brings the home into the marriage and therefore has a $200,000 exemption.

If the home stays in Person A’s name:

• The $200,000 exemption remains entirely with Person A.
• Any increase in value above $200,000 is typically split equally between both parties.

If Person A puts the home into joint names:

• Person A is deemed to have gifted half of their exemption to Person B.
• As a result:
  • Person A is entitled to:
    • Half of the original exemption: $100,000
    • Half of the remaining value: $50,000
  • Person B is entitled to:
    • The other half of the gifted exemption: $50,000
• Any increase in value of the home after marriage is still shared equally by both parties.

How does refinancing the family home affect the exemption?

The court has found that refinancing a home does not affect the value of the exempt property. To use the example above, if Person A has an exemption of $200,000 and refinances the home for $100,000 while keeping it solely in their name, Person A’s exemption remains $200,000. The remortgage debt of $100,000 may be splitable family debt, however.

All in all, the family home is an important asset that needs to be considered carefully when dividing the family assets.