A Quick Guide to Land Transfer Tax in Ontario
When you purchase a home, you have to pay Land Transfer Tax in Ontario to the government. How much depends on a couple of factors. Here’s a quick guide on what you need to know.
What is Land Transfer Tax?
Land Transfer Tax is paid to the province when the transaction is closed. Land includes, but is not limited to: Existing structures, structures to be built, and fixtures.
How Much do I Have to Pay?
Land Transfer Tax is usually based on the amount that was paid for the land as well as any mortgage or debt that has been acquired when buying the land. It can also be based on fair market value of the land in certain cases.
According to the Ontario Ministry of Finance, the rates are as follows:
- Up to and including $55,000: 0.5%
- Exceeding $55,000, up to and including $250,000: 1.0%
- Exceeding $250,000, up to and including $400,000: 1.5%
- Exceeding $400,000: 2.0%
- Exceeding $2,000,000, where the land contains one or two single family residences: 2.5%
Read more about the rates from the Ontario Ministry of Finance.
If you are buying land in Toronto, you have to pay the Municipal Land Transfer Tax in addition to the Provincial Land Transfer Tax. The rates are the same for land containing one or two single family residences, and for all other non-single family residences the rates are as follows:
- Up to and including $55,000.00: 5%
- $55,000.01 to $250,000.00: 1.0%
- $250,000.01 to $400,000.00: 1.5%
- Over $400,000.00: 2.0%
Here is a rate calculator to help you determine your rate.
The First Time Homebuyer’s Refund
If you are a first time homebuyer, you are eligible for a refund of up to $4,000 for Land Transfer Tax. The refund is only eligible for first-time homebuyers, and if you or your spouse has previously owned a home while you are married, you are not eligible for the refund. However, if your spouse owned a home before you were married you may still claim a refund. If the buyers are parent and child, the child is eligible to claim up to 50% of the refund.
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