What is Land Transfer Tax?
Land transfer tax (LTT) is a significant but often overlooked closing cost when purchasing a home. Except for Alberta and Saskatchewan, which charge a smaller transfer fee, all Canadian provinces impose a land transfer tax. This tax is typically calculated as a percentage of the property’s value, often based on the asking price. In Toronto, home buyers also face an additional municipal land transfer tax.
To help ease this financial burden, Ontario, British Columbia, Prince Edward Island, and the City of Toronto offer rebates on land transfer taxes for first-time home buyers.
How to Calculate Land Transfer Tax
Land Transfer Tax Calculator
Land transfer taxes are calculated based on your property’s purchase price, with rates set by each province and, in some cases, municipalities. To calculate the land transfer tax for your location, enter your details into our calculator above. Here’s a breakdown of how land transfer taxes are applied in Ontario and Toronto:
Ontario Land Transfer Tax
Ontario’s land transfer tax rates were last updated in 2017, adding a new bracket for properties valued at over $2 million but keeping the rates for lower brackets unchanged. Additionally, a 15% non-resident speculation tax was introduced for properties in the Greater Golden Horseshoe Region.
| Purchase Price of Home | Marginal Tax Rate |
|---|---|
| First $55,000 | 0.5% |
| $55,000.01 to $250,000 | 1.0% |
| $250,000.01 to $400,000 | 1.5% |
| $400,000.01 to $2,000,000 | 2.0% |
| Over $2,000,000 | 2.5% |
Ontario First-Time Home Buyer Land Transfer Tax Refund
First-time home buyers in Ontario are eligible for a land transfer tax refund of up to $4,000.
Eligibility Requirements:
- Must be a Canadian citizen or permanent resident
- Must be at least 18 years old
- Must occupy the home within nine months of purchase
- Must not have previously owned a home anywhere in the world
- The buyer’s spouse must not have owned a home while being your spouse
This refund covers the full land transfer tax on homes up to $368,000. For homes priced above this, buyers will receive the maximum $4,000 refund and will need to pay the remaining tax balance. To claim this refund, you must apply within 18 months of purchasing the home.
Toronto Land Transfer Tax
In addition to the provincial tax, Toronto imposes its own municipal land transfer tax (MLTT). This tax applies to properties within specific boundaries: Steeles Avenue to the north, Etobicoke to the west, Scarborough to the east, and Lake Ontario to the south.
As of January 1, 2024, Toronto introduced additional MLTT rates for properties valued at $3 million or more that contain up to two single-family residences. These new rates start at 3.5% and can go up to 7.5% for homes valued at $20 million or more.
| Purchase Price of Home | Marginal Tax Rate |
|---|---|
| First $55,000 | 0.5% |
| $55,000.01 to $250,000 | 1.0% |
| $250,000.01 to $400,000 | 1.5% |
| $400,000.01 to $2,000,000 | 2.0% |
| Over $2,000,000 | 2.5% |
| Over $3,000,000 and up to $4,000,000 | 3.5% |
| Over $4,000,000 and up to $5,000,000 | 4.5% |
| Over $5,000,000 and up to $10,000,000 | 5.5% |
| Over $10,000,000 and up to $20,000,000 | 6.5% |
| Over $20,000,000 | 7.5% |
Toronto First-Time Home Buyer Land Transfer Tax Rebate
First-time home buyers in Toronto purchasing new or resale homes can receive a rebate of up to $4,475 on their municipal land transfer tax.
Eligibility Requirements:
- Must be a Canadian citizen or permanent resident
- Must be at least 18 years old
- Must occupy the home within nine months of purchase
- Must not have previously owned a home anywhere in the world
- The buyer’s spouse must not have owned a home while being your spouse
Need Expert Advice?
Navigating the costs and requirements associated with buying a home can be challenging. At Homelife Paramount Realty, our experienced realtors are here to provide expert advice and guide you through the entire home-buying process. If you need mortgage assistance or have questions about financing, contact Ritesh Jhamb at 416-844-6000. He’s ready to help you find the best mortgage options and make your home-buying journey smooth and successful!
