Land Transfer Tax and Rebates (Provincial & Toronto)
If you're buying a "residential dwelling" in Ontario (a house or condo to most!), one of the closing costs that your lawyer will pay to the Ontario Ministry of Finance on your behalf (but with your money!) is land transfer tax. If you happen to live in the City of Toronto, you'll be on the hook for an additional land transfer tax payable to the City. Click here to access my calculator that let's you know how much land transfer tax will apply to your purchase of a resale residential property. For information regarding the land transfer tax as it relates to pre-constructed or 'newly constructed home/condo' purchases, click here.
Fortunately, first-time buyers of new and re-sale homes are eligible to receive rebates of the provincial and Toronto land transfer taxes. The maximum Ontario land transfer tax (LTT) rebate for first-time buyers is $4,000 and the maximum Toronto LTT rebate for first time buyers is $4,475. Click here for rebate eligibility requirements or continue scrolling down.
Now for a couple of tidbits of humor (or not). Effective April 1, 2016 (ironically, April Fools’ Day), the City of Toronto imposed an administration fee of $75 plus HST, or $84.75, to cover the cost of collecting the municipal land transfer tax on the registration of all title transfers. The fee amounts to a further tax on top of the municipal land transfer tax & since the fee itself is subject to HST, Ontario property purchasers are being charged a tax on a tax on a tax! Also, first-time home buyers who receive a full rebate of the municipal land transfer tax (i.e. buyers who are exempt from payment of the tax) remain subject to the administrative fee!
Below, I've included detail as to how to manually calculate the land transfer tax but you can simply click here to fiddle around with my calculator.
Provincial LTT
• Provincial LTT is payable anywhere in Ontario (including Toronto); there's a separate land transfer tax for properties located in the City of Toronto (discussed below).
• Maximum provincial LTT first-time buyer rebate is $4,000 (equivalent to the provincial LTT payable on a $368,250 property).
• For RESALE homes, the provincial rebate applies only to first-time buyers who entered into Agreements of Purchase and Sale AFTER December 13, 2007.
• First-time buyers of NEWLY CONSTRUCTED HOMES are eligible for the provincial rebate even if they entered into Agreements of Purchase and Sale prior to December 13, 2007.
• The provincial LTT for residential properties is calculated as follows:
o 0.5% of the amount of the purchase price up to and including $55,000, plus
o 1% of the amount of the purchase price between $55,000 and $250,000, plus
o 1.5% of the amount of the purchase price between $250,000 and $400,000, plus
o 2% of the amount of the purchase price between $400,000 and $2,000,000, plus
o 2.5% of the amount of the purchase price above $2,000,000
Toronto LTT
• Toronto LTT is payable only for properties in the City of Toronto.
• Maximum Toronto LTT first-time buyer rebate is $4,475 (equivalent to the Toronto LTT payable on a $400,000 property).
• ANY purchaser who entered into an Agreement of Purchase and Sale prior to December 31, 2007 is eligible for a FULL rebate of the Toronto LTT.
• Toronto LTT rebates are in addition to any provincial LTT rebate that the buyer qualifies for.
• The Toronto LTT for residential properties is calculated as follows:
o 0.5% of the amount of the purchase price up to and including $55,000, plus
o 1% of the amount of the purchase price between $55,000 and $250,000, plus
o 1.5% of the amount of the purchase price between $250,000 and $400,000, plus
o 2% of the amount of the purchase price between $400,000 and $2,000,000, plus
o 2.5% of the amount of the purchase price above $2,000,000
Rebates available to First-Time Buyers
To be eligible as a first-time buyer for the provincial LTT rebate and/or Toronto LTT rebate,
• The purchaser must be at least 18 years of age.
• The purchaser must occupy the home as his or her principal residence no later than nine months after the date of the conveyance or disposition.
• The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
• If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world while he or she was the purchaser’s spouse. If this is the case, NO refund is available to either spouse. Note: If a purchaser’s spouse owned an interest in a home BEFORE becoming the purchaser’s spouse, but not while the purchaser’s spouse, the purchaser may be eligible for some rebate.
• The purchaser is a Canadian citizen or permanent resident of Canada. If the purchaser becomes a Canadian citizen or permanent resident within 18 months of the transfer, they may apply for and may qualify for the rebate.
Newly Constructed Homes (Including New Condos)
The land transfer tax calculation for a newly constructed home (including a new condo) differs somewhat from the calculation for resales. For now just be aware that you generally can't simply use the purchase price of the 'newly constructed home/condo' because it typically includes HST and related HST rebates. Click here to read about how the 'base' amount is determined for 'newly constructed' homes. If you require greater detail, feel free to contact me.