Ontario and Toronto Land Transfer Tax Details

There always seems to be plenty of confusion surrounding the topic of land transfer tax, and the new Toronto land transfer tax, which was implemented earlier this year, didn't help make things any clearer.

Let us begin with the Ontario Government Land Transfer Tax.  This tax applies to all residential real estate property in Ontario.  In the case of new homes purchased from the builder, the tax is payable on the amount before GST.  The tax is payable upon closing and is calculated as follows:

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;

2.0% on the amount exceeding $400,000.

Rebates on the Ontario LTT are available for first time buyers only.  To qualify you, and your spouse if applicable, must be at least 18 years of age and must have never owned an interest in a home anywhere in the world (since you became spouses).  If one of you or your spouse owned a home prior to being married and sold that that home prior to marriage, the other spouse may claim the entire refund, even in the case of a home owned jointly.  If two non-spouses purchase a home with 50/50 interest, where only one purchaser qualifies as a first time buyer, that buyer may reclaim 50% of the rebate.  The total rebate is capped at $2,000, in any case.

The Ontario LTT rebate now applies to both new and resale homes.  This was amended alongside the Toronto Land Transfer Tax implementation, which is calculated as follows:

0.5% on the first $55,000 of the purchase price, plus;

1.0% on the amount exceeding $55,000 up to and including $400,000, plus;

Rebates on the Toronto LTT are also available for first time buyers only, and are capped at a total of $3,725.  Properties that fall subject to the Toronto LTT are those within the "416" area.  First time buyer qualification rules, for the Toronto LTT, are the same as those used for the Ontario LTT.

I hope this helps clarify any questions you may have pertaining to the land transfer taxes that affect our properties.  It's easy to see why such a backlash was expected when Toronto's LTT rates effectively doubled.  While first time buyers remained relatively unharmed, growing families found that their second home purchase decision became significantly impacted.  For any other questions or comments pertaining to land transfer taxes, or real estate in general, feel free to contact me at amitp@rogers.com.

Amit Paul is a realtor, owner and partner with two Toronto real estate firms. He can always be reached at ap.1@rogers.com.