Area of Law: Real Estate Law
Answer # 396
Land Transfer TaxRegion: Ontario Answer # 396
Land transfer tax is a provincial tax on real estate purchases, which is paid by buyers. In addition to provincial land transfer tax, some municipalities, such as the City of Toronto, have their own municipal land transfer taxes (MLTT). Land transfer tax is not payable by the seller.
If you buy land or an interest in land in Ontario, you must pay Ontario’s land transfer tax, regardless of whether the transfer is registered at one of Ontario’s land registry offices. That said, there are limited circumstances where land transfer tax is not required. These include:
- certain transfers between spouses
- certain transfers from an individual to their family business corporation
- certain transfers of farmed land between family members
- certain transfers of a life lease from a non-profit organization or a charity.
Ontario land transfer tax rates
For Canadian purchasers land transfer tax is calculated at the following rates:
|Value of Consideration||Rate|
|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%|
(*for land that contains at least one and not more than two single family residences)
For example, the total Ontario land transfer tax payable by the purchaser of a $100,000 property would be $725, while the land transfer tax on a $300,000 property is $2,975.
Toronto land transfer tax
When is land transfer tax paid?
Ontario’s land transfer tax must be paid at the time the transfer is registered.
If the transfer is not registered, buyers must complete a form called, Return on the Acquisition of a Beneficial Interest in Land, and submit it to the Ministry of Finance along with the payment of tax within 30 days of the purchase. This form is available at the Ministry.
Provincial land transfer tax refund for first-time homebuyers
You may be eligible for a refund of all, or part of the provincial land transfer taxes payable if you are a first-time homebuyer and you:
- are a Canadian citizen or permanent resident of Canada,
- are 18 years of age or older,
- live in the home within 9 months of purchasing it,
- cannot have owned a home before, and
- if you have a spouse, they cannot have owned a home during the time they have been your spouse.
How much is the provincial refund?
First-time homebuyers in Ontario may be eligible for a rebate equal to the full amount of their land transfer tax, up to a maximum of $4,000 (as of January 1, 2017):
- the rebate will cover the full tax amount up to a maximum home purchase price of $368,333
- for homes with purchase prices over $368,333, you will qualify for the maximum rebate, but will still owe the remainder of their land transfer tax
- if buying a home with a spouse, but only one of you qualifies for this rebate, you can still receive 50% of the rebate
More information on the land transfer tax rebate can be found here.
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