What Is Land Transfer Tax?
Wednesday Mar 02nd, 2022
There are many closing costs associated with purchasing a property. Legal costs, adjustments and land transfer tax to name a few. Today, I want to talk about land transfer tax. Land transfer tax was introduced in Ontario in the 1970's and it is the tax you must pay when you buy land or an interest in land. It is paid to the province (or the municipality, in some instances) by the buyer of a property; sellers never pay this tax. Some municipalities, such as the City of Toronto, have their own municipal land transfer taxes and that is in addition to the provincial land transfer tax, so you would have two taxes to pay on closing when you purchase land if you are purchasing in Toronto.
How much will it cost me??
Usually the Land Transfer Tax is to be paid as soon as you take possession of the property. Your lawyer will arrange for the payment to be made when the deed is transferred in your name on closing day. Land Transfer Tax is a one-time payment that you will only pay once.
The rates are as follows:
Up-to and including $55,000 0.5%
Over $55,000 up-to $250,000 1.0%
Over $250,000 up-to $400,000 1.5%
Over $400,000 2.0%
Over $2,000,000* 2.5%
(*for land that contains at least one and not more than two single family residences)
For example, the Ontario land transfer tax payable by the buyer on a $500,000 home would be $6,475
Provincial land transfer tax refund for first time home buyers:
You are still required to pay the land transfer tax as a first time buyer however, you may be eligible for a refund of all or part of the land transfer tax up to $4,000. You can find out what rebates you are eligible for on your provincial government website.
Who qualifies as a first time home buyer in Ontario?
To qualify as a first time home buyer in Ontario:
You must be at least 18 years of age.
You must be a Canadian citizen or permanent resident.
You must occupy the property as your principal residence.
You cannot have owned a home, or a stake in a home, anywhere in the world, at any time.
Your spouse/common-law partner cannot have owned a home while they were your partner.
Whether you have a quick question or you are ready to begin your home buying or selling journey, book a call with me using the link below: