What is land transfer tax in Ontario?
Land Transfer tax is a tax payable on every conveyance of land tendered for registration and every unregistered disposition of a beneficial interest in land, unless specifically exempt under the Land Transfer Tax Act (Act) or regulations. Details of this are covered in this Ministry of Finance bulletin.
What is the Toronto land transfer tax?
The Toronto Land Transfer tax is an additional land transfer charge added to all home purchases within the boundaries of Toronto in addition to the provincial land transfer tax. The boundary for which this applies is south of Steeles Avenue, east of Etobicoke, west of Scarborough, and north of Lake Ontario. For details of the calculation refer to this link.
How is the land transfer tax calculated?
Land transfer tax is calculated on the value of the consideration as defined in subsection 1(1) of the Land Transfer Act. It includes the purchase price, liabilities assumed, benefits conferred, soft costs and the cost of upgrades. In some instances, the value of the consideration is deemed to be the fair market value of the land. For example, leases with terms that can exceed fifty years and certain transfers between corporations and shareholders. For the definitions of value of the consideration and land, please see Definitions or the Act.
Effective January 1, 2017, the tax rates for land transfer tax will depend on the date of the agreement of purchase and sale. If an agreement of purchase and sale is entered into after November 14, 2016, and registration or the disposition occurs on or after January 1, 2017, the tax rates on the value of the consideration are as follows:
amounts up to and including $55,000: 0.5%
amounts exceeding $55,000, up to and including $250,000: 1.0%
amounts exceeding $250,000, up to and including $400,000: 1.5%
amounts exceeding $400,000: 2.0%
amounts exceeding $2,000,000, where the land contains one or two single family residences: 2.5%.
For the definition of single family residence, see Definitions or the Act.
You can use the calculator below to calculate the land transfer tax you must pay on the purchase of your property.
Who pays land transfer tax in Ontario?
In Ontario, the buyer of a home or condo pays land transfer tax when they purchase the property – the sellers never pay. Your lawyer will arrange for land transfer taxes to be paid when the deed to the new home is transferred in your name (on closing day).
Is the land transfer tax paid on the purchase of a new property a tax deductible expense?
Sadly, no. You cannot deduct land transfer taxes you paid when you bought your property as a tax deduction. However, you can add these amounts to the cost of the property which may be important when you go to sell your home. Please note that there is an exception of sorts for first time home buyers.
What are the exceptions to the land transfer tax for first time home buyers?
First-time homebuyers are eligible for a land transfer tax rebate. For those who are purchasing their very first home, there is a $4,000 maximum tax rebate on the land transfer tax in Ontario. Based on the rates associated with this tax, the rebate will cover the entire tax for properties up to a purchase price or value of up to $368,333. First-time buyers of properties with a purchase price higher than $368,333 will receive the entire $4,000 tax rebate and will have to pay whatever remains on the balance amount of the land transfer tax. In order to be considered a first-time homebuyer in Ontario, you must:
- Be a Canadian citizen or permanent resident of Canada
- Be aged 18 years or older
- Live in the property within 9 months of buying it
- Never have owned a property previously
- Apply for the rebate within 18 months of buying the property
- If you are married, your spouse may not have owned any real estate anywhere in the world either while being married to you. However, they may have owned property at one time before having married you.
- Also, if the property you buy is a new build, it needs to qualify for a home warranty.
What are the exceptions to the land transfer tax for first time home buyers?
First-time homebuyers are eligible for a land transfer tax rebate. For those who are purchasing their very first home, there is a $4,000 maximum tax rebate on the land transfer tax in Ontario. Based on the rates associated with this tax, the rebate will cover the entire tax for properties up to a purchase price or value of up to $368,333. First-time buyers of properties with a purchase price higher than $368,333 will receive the entire $4,000 tax rebate and will have to pay whatever remains on the balance amount of the land transfer tax. In order to be considered a first-time homebuyer in Ontario, you must:
- Be a Canadian citizen or permanent resident of Canada
- Be aged 18 years or older
- Live in the property within 9 months of buying it
- Never have owned a property previously
- Apply for the rebate within 18 months of buying the property
- If you are married, your spouse may not have owned any real estate anywhere in the world either while being married to you. However, they may have owned property at one time before having married you.
- Also, if the property you buy is a new build, it needs to qualify for a home warranty.
Land transfer tax (LTT) is often an overlooked expense when considering the total cost of purchasing a home. All provinces have a land transfer tax, except for Alberta and Saskatchewan, who instead levy a much smaller transfer fee. In most provinces the tax is calculated as a percentage of property value, using asking price as a close estimate. Homebuyers in Toronto, however, also incur an additional municipal tax. To help offset the cost, Ontario, British Columbia, Prince Edward Island, and the City of Toronto offer land transfer tax rebates for first-time homebuyers.
Land Transfer Tax Calculator
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