This article explains the Land transfer tax in Toronto. If you would like to access the land transfer tax calculator, click here
WHAT IS LAND TRANSFER TAX?
Ontario’s Land Transfer Tax is a provincial tax payable by the purchaser upon the acquisition of an interest in land by registered conveyance or unregistered disposition. Therefore, if you purchase a property or land you are responsible for paying Land Transfer Tax to the province at the time the transaction closes.
WHAT TRANSACTIONS QUALIFY – TAX PAYABLE?
- The purchase of all property whether it be residential or commercial;
- the transfer of title/ownership of the property into another persons name (ie: title is in both parents names and they want to transfer ownership to their only child – the child is responsible for paying Land Transfer Tax.
WHO IS RESPONSIBLE FOR PAYING THE TAX?
Every person/entity obtaining an interest in land or property is liable to land transfer tax. The purchaser is responsible for paying Land Transfer Tax NOT the seller.
WHEN IS LAND TRANSFER TAX PAYABLE?
Land Transfer Tax is payable at the time the purchaser is registered as the new owner in the Land Title Office on closing. First time home buyers of newly built homes receive their refund immediately. First time home buyers of resale homes must apply to the government for their refund.
HOW IS THE TAX PAID?
The purchaser’s solicitor pays the Land Transfer Tax on behalf of the purchaser on the closing date. The purchaser will be required to provide their solicitor closing funds (certified) that will cover the closing expenses.
HOW IS THE TAX CALCULATED?
The tax is calculated on the value of the consideration for the transfer. In certain circumstances the Land Transfer Tax Act (Act) deems the value of the consideration to be the fair market value of the land.
On transfers of residential real property in Ontario, Land Transfer Tax (LTT) is calculated on the purchase price (less a GST calculation, if the property purchased is a newly built home). The land transfer tax is payable by the purchaser on the purchase price upon registration of a Transfer/Deed of Land in the Ontario Land Registry Office on closing based on the following upward sliding scale:
0.5% on the first $55,000 of the purchase price, plus
1.0% on the amount exceeding $ 55,000 up to and including $250,000, plus
1.5% on the amount exceeding $250,000 up to and including $400,000, plus
2.0% on the amount over $400,000.
(PLEASE NOTE: non-residential properties, such as industrial or commercial real estate, there is no 2% charge since the tax rate is 1.5% for any amount of purchase price over $250,000 regardless of the total price. This also applies to vacant land)
NOTE: If you are buying new from the builder, the Land Transfer Tax is calculated on a price which is net of GST and therefore the Land Transfer Tax will be slightly less for a new home than for a resale home with the same price.
BELOW IS AN EASY FORMULA FOR CALCULATING LAND TRANSFER TAX:
– For properties $55,000 and under x .5%
– For properties over $55,000 up to and including $250,000 x 1% – $275
– For properties over $250,000 up to and including $400,000 x 1.5% – $1525
– For properties over $400,000 x 2% – $3,525 (residential and duplexes)
PLEASE NOTE: non-residential properties, such as industrial or commercial real estate, there is no 2% charge since the tax rate is 1.5% for any amount of purchase price over $250,000 regardless of the total price. This also applies to vacant land.)
LAND TRANSFER TAX REFUND FOR FIRST TIME HOME BUYERS
The Land Transfer Tax Refund is the amount of tax payable that is being claimed as a refund up to a maximum of $2,000.00. The first-time home purchaser may claim the full maximum amount or a proportion of the maximum refund amount. For example:
Cost of home = $100,000.00; land transfer tax payable = $725;
land transfer tax refund would be $725.
Cost of home = $200,000.00; land transfer tax payable = $1,725.00;
land transfer refund would be $1,725.00.
Cost of home = $300,000.00; land transfer tax payable = $2975.00;
land transfer tax refund would be capped at $2,000.00