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THE ULTIMATE GUIDE TO LAND TRANSFER TAX IN ONTARIO

Land Transfer Tax Calculator

Land Transfer Tax: $0
Provincial: $0
Municipal: $0
Rebate: $0

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What is Land Transfer Tax?

If you’re like many Canadians, buying your first home can be an exciting and fulfilling process.

You’ve found the perfect home in a beautiful part of town. You’ve fallen in love with everything about the home from the flooring to the kitchen cabinets. The findings of your home inspection reveal the property is in good structural condition and will be a wise investment.

It’s now time for you to close the transaction. But wait – there’s a land transfer tax you’ll need to pay, and you know nothing or little about it. What is it? How does it work? How is it calculated? Do you have to pay for it?

Like it or not, this tax is going to affect you, so it’s best to be informed about it before finalizing your purchase – something many Canadians don’t do.

Here’s everything you need to know about land transfer tax in Ontario.

As the name suggests, a land transfer tax is a tax payable during the closing of a real estate property and is applicable in most situations where there’s a change in a property’s registered owner. These taxes are a crucial part of Ontario real estate closing costs and is paid by the purchaser of the home .The land transfer tax for a property is calculated as a percentage of the purchase price.

The tax is applicable in provinces and municipalities across Canada, including the province of Ontario. If you buy a home in Ontario, you’ll be expected to pay a Provincial Land Transfer Tax (PLTT).

Who Pays Land Transfer Tax?

As already pointed out, the Ontario Land Transfer tax is paid by any person who purchases property in Ontario. The tax is collected by the provincial government of Ontario.

Land transfer tax is typically based on the full value of the purchased property. This includes any debt or pending mortgage payments paid as part of the property purchase.

This tax is, however, not always based on the purchase price of the property. In certain cases, the tax is based on the fair market value of the property, which is interpreted as the property’s purchase price. Some examples of such cases include:

When transferring ownership of property with a remaining lease term of over 50 years

When transferring ownership of property from a corporation to a shareholder

When transferring property to a corporation upon issue of shares by the corporation

There’s a minor difference between the general Ontario land transfer tax laws and land transfer tax laws used in Toronto.

If you buy a home anywhere in Ontario, you’ll need to pay the Provincial Land Transfer Tax (PLTT). However, if the property is located in Ontario’s capital, Toronto, you’ll have to pay the PLTT plus the Municipal Land Transfer Tax (MLTT) payable only in Toronto.

Though other Ontario municipalities have been demanding for the right to impose their own land transfer tax, only Toronto benefits from the discretionary authority to do so.

If your Ontario home is located in Toronto, be prepared to pay land transfer taxes twice. If it is located outside Toronto, you won’t have to pay any local land transfer taxes, for now.

How to Calculate Land Transfer Tax

The federal government of Canada allows each provincial government full discretion over what land transfer tax rates they should charge. In Ontario, land transfer taxes are calculated as a percentage of the purchase price of your property.

The taxes are not flat taxes – the tax rates increase with an increase in the value of the property, meaning you’ll need to pay more taxes for higher priced property.

Ontario’s land transfer tax for homes valued at $55,000 and below is 0.5%, whereas a tax rate of 2.5% is payable on property valued at or exceeding $2,000,000. You can check out these tax rates to find out how land transfer tax for different real estate properties in Ontario are calculated

Below you will find a chart to help calculate your Land Transfer Tax in Ontario. Remember, if you are purchasing a home in Toronto you need to double this amount to account for Toronto’s Municipal Land Transfer Tax.

Purchase Price of Home Marginal Tax Rate
First $55,000 0.5%
$55,000.01 to $250,000.00 1.0%
$250,000.01 to $400,000.00 1.5%
$400,000.01 to $2,000,000.00 2.0%
Over $2,000,000 2.5%

Land Transfer Tax Rebate?

A land transfer tax rebate is a refund of all or part of the land tax paid on a property purchase.

Available in select provinces and cities across Canada, land transfer tax rebates help first-time home buyers recoup some or all of the cost of their land transfer tax. A pretty attractive offer after you make what is likely to be the biggest purchase of your life!

If you’re eligible, land transfer tax rebates are available to first-time homebuyers in the provinces of Ontario, British Columbia and Prince Edward Island, as well as the City of Toronto.

Ontario Land Transfer Tax Rebate

In Ontario, first-time homebuyers may be eligible for a rebate that matches the entire amount of their land transfer tax, up to a maximum of $4000.

Think you might be eligible for the Ontario Land Transfer Tax Refund for First-Time Homebuyers? See if you meet these requirements:

You are 18 years of age or older

You are a Canadian citizen or permanent Canadian resident

You have never owned a home before

You will live in the home within 9 months of purchasing it

If you have a spouse, he or she has never owned a home during the time you’ve been married

When it comes to Ontario land transfer tax rates, the rebate covers the entire tax amount up to a maximum home buying price of $368,333. If you buy a home with a purchase price greater than $368,333 you’re still eligible for the maximum rebate amount ($4000) – you’ll simply have to pay the remainder out of pocket.

And if you’re purchasing your home with your spouse, but only one of you is eligible for the rebate, you can still get up to 50%.

When the time comes, your real estate lawyer will help you file the required documents. There are two filing methods for the land transfer tax rebate:

Electronically

Via download of the Ontario Land Transfer Tax Refund Affidavit for First-Time Purchasers of Eligible Homes

Note* You must apply within 18 months of the date of transfer to be eligible for the land transfer tax rebate.

Toronto Land Transfer Tax Rebate

As discussed, the City of Toronto has its own municipal land transfer tax. Which means, unfortunately for Toronto homebuyers, they’re subject to not one but two land transfer taxes – both the municipal and the provincial.

The good news is first-time homebuyers in Toronto may be eligible for a rebate that equals the amount of their municipal land transfer tax up to a maximum of $4,475. And that’s not all. You’d still eligible for the Ontario rebate as well.

Think you might be eligible for the Toronto Municipal Land Transfer Tax Rebate for First-Time Purchasers? Check if you meet the following requirements:

You are 18 years of age or older

You are a Canadian citizen or permanent Canadian resident

You have never owned a home before

You will live in the home within 9 months of purchasing it

If you have a spouse, he or she has never owned a home during the time you’ve been married

According to Toronto’s land transfer tax rates, the rebate covers the entire tax amount up to a maximum home buying price of $400,000. If you buy a home with a purchase price that exceeds $400,000, you’re still eligible for the maximum rebate. Then you just need to pay what’s left over.

And similar to the provincial regulations, if you’re purchasing your home with your spouse, but only one of you is eligible for the Toronto rebate, you can still get 50% refunded to you. When everything is ready, your real estate lawyer claims the rebate electronically when he or she registers your deed/transfer.

Who’s Exempted from Paying Land Transfer Tax?

Can you avoid paying a land transfer tax in Ontario? Yes, you can.

Like with many other types of taxes, some individuals or group of individuals are exempted from paying land transfer tax in Ontario. These exemptions may include certain transfers of farmed land:

between spouses

from an individual to a family-owned corporation

from a family corporation to a family member

ertain transfers of a life lease from a registered charity or non‑profit organization are also tax exempt. Before being exempted from paying land transfer tax, you must provide certain documentation required to prove you’re eligible for the exemption.

More Questions About Ontario Land Transfer Taxes?

Paying land transfer tax for your Ontario home is one of the things you’ll have to do to close your big purchase. This tax can get expensive, depending on the value of the property you’re purchasing.

If you’re eligible for the land transfer tax rebate offered to first‑time homebuyers, you can take advantage of the refund to reduce the total cost of your purchase, but this will be applied by your real estate lawyer.

If you need professional help with your home closing, don’t hesitate to contact our real estate lawyers to discuss your purchase in detail.

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