Land Transfer Tax

LAND TRANSFER TAX

Land transfer tax (LTT) is often overlooked when considering the total cost of purchasing a home. All provinces have a land transfer tax, except Alberta and Saskatchewan, who instead levy a much smaller transfer fee. To see how land transfer tax is calculated on a home purchased in Ontario,

In most provinces the tax is calculated as a % of property value, using asking price as a close estimate. Homebuyers in Toronto, however, also incur an additional municipal tax.

To help offset the unwelcome cost, Ontario, British Columbia, Prince Edward Island and the City of Toronto offer land transfer tax rebates for first-time homebuyers.

Here we have some pointers on what transpires with  Ontario land transfer tax:

Purchase Price of Home

Marginal Tax Rate

First $55,000

0.5%

On $55,000 to $250,000

1.0%

On $250,000 to $400,000

1.5%

Over $400,000

2.0%

Source: Ontario Ministry of Revenue, “Land Transfer Tax”

Ontario first-time homebuyer land transfer tax rebate

 

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The Ontario land transfer tax rebate is equal to the full value of the land transfer tax up to a maximum of $2,000.

Eligibility

The buyer must be older than 18 years

The buyer must occupy the home within nine months of purchase

The buyer cannot have owned a home anywhere in the world

The buyer’s spouse cannot have owned a home while being your spouse

If you are purchasing a new home, it must be eligible for home warranty

Based on Ontario land transfer tax rates, the rebate will cover the fully taxed amount on houses up to $227,500. For houses over $227,500, homebuyers will receive the maximum $2,000 rebate. To obtain this refund, you need to apply within 18 months after the purchase of the home.1

Souce: Ontario Ministry of Revenue, “Land Transfer Tax Refund for First-time Homebuyers”

 

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Toronto Land Transfer Tax

If purchasing a home in Toronto, there is an additional municipal land transfer tax. Toronto’s land transfer tax applies within the following boundaries: Steeles Avenue as the North border, Etobicoke as the West border, Scarborough as the East border, and Lake Ontario as the South border.

Purchase Price of Home Marginal Tax Rate
First   $55,000 0.5%
On   $55,000 to $400,000 1.0%
Over   $400,000 2.0%

Source: City of Toronto, “Municipal Land Transfer Tax”

Toronto first-time homebuyer land transfer tax rebate

 

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First-time homebuyers in Toronto of new and resale homes are eligible to receive a refund up to a maximum of $3,725.

 

Eligibility

The buyer must be older than 18 years

The buyer must occupy the home within nine months of purchase

The buyer cannot have owned a home anywhere in the world

The buyer’s spouse cannot have owned a home while being your spouse

If you are purchasing a new home, it must be eligible for home warranty

Based on Toronto land transfer tax rates, first-time homebuyers with homes of $400,000 or less will avoid the tax altogether.

Source: City of Toronto, “Municipal Land Transfer Tax”

Note –    Further details available when required for Provinces and Territories out with Ontario.

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