Ontario Land Transfer Tax

Here are the land transfer tax rates in Ontario, which vary based on the purchase price of your home:

Home Price Range	Tax Rate
First $55,000	0.5%
$55,000.01 – $250,000.00	1.0%
$250,000.01 – $400,000.00	1.5%
$400,000.01 – $2,000,000.00	2.0%
Over $2,000,000.00	2.5%

If you’re buying a home in Ontario, you’ll also need to pay a Ontario Land Transfer Tax. In addition to the land transfer tax, there are other closing costs in Ontario when buying a home, such as fees for an Ontario real estate lawyer and other buyer-related expenses.

Let’s look at an example to calculate the Ontario land transfer tax for a $300,000 home:

1. 1. For the first $55,000:
      $55,000 x 0.50% = $275 land transfer tax
   2. For the next portion ($250,000 – $55,000):
      ($250,000 – $55,000) x 1.0% = $1,950 land transfer tax
   3. For the remaining portion ($300,000 – $250,000):
      ($300,000 – $250,000) x 1.5% = $750 land transfer tax

Add these together:

$275 + $1,950 + $750 = $2,975 total Ontario land transfer tax

There’s also an Ontario land transfer tax rebate for first-time home buyers, with a maximum rebate of $4,000. This refund fully covers the tax for homes up to $368,000. For homes over $368,000, buyers will receive the full $4,000 rebate and pay the remaining LTT balance.

Here are some examples of the Ontario land transfer tax rebate for different purchase prices:

• • For a $100,000 home, you receive a rebate of $725, making the net tax payable $0.
  • For a $200,000 home, you receive a rebate of $1,725, making the net tax payable $0.
  • For a $227,500 home, you receive a rebate of $2,000, making the net tax payable $0.
  • For a $600,000 home, you receive a rebate of $4,000, so the net tax payable is $4,475.

To be eligible for the first-time home buyer rebate in Ontario, you must meet certain criteria, including:

• • Being a Canadian citizen or permanent resident.
  • Being 18 years or older.
  • Occupying the home within nine months of purchase.
  • Not having owned a home previously.
  • Ensuring that your spouse has not owned a home while being your spouse, although they may have been a previous home owner.
  • If the home is newly constructed, it must also be eligible for home warranty.
  • You must apply for the refund within 18 months of purchase.

Application Process

When you’re registering your land transfer and paying taxes, you can apply for a tax refund right away. You’ll find tax rebate application forms online for those who register electronically or in person at government offices.

If you don’t claim the rebate during the registration, you’ll need to pay the full tax amount. However, you can still apply for a refund from the Ministry of Finance within 18 months. To complete your application, you’ll need the following information:

1. 1. A filled-out Ontario Land Transfer Tax Refund Affidavit for First-Time Home Buyers.
   2. A copy of the registered land transfer deed.
   3. A copy of the purchase and sale agreement.
   4. A copy of a document showing proof of your residence, like a driver’s license, telephone or cable bills, and more.

The Land transfer tax for Toronto is in addition to Ontario Land Transfer Tax, so if you are buying in Toronto then call 416 670 8500 to get the calculations for Toronto Land Transfer tax.

Who Pays Land Transfer Tax?

In Ontario, the general rule is that the purchaser of the property is responsible for paying land transfer tax. There are some exceptions to this rule, such as if the property is being transferred as a gift. In this case, the donor would be responsible for paying the land transfer tax.

When do you the Pay Land Transfer Tax?

Land transfer tax is paid at the time of closing. This means that the lawyer will provide the breakdown of all the closing costs to you and land transfer tax will be one of those costs. The real estate lawyer will prepare the land transfer tax forms on your behalf. The mortgage proceeds will not cover the land transfer tax and it is up to the client to provide the funds to pay for the land transfer tax, usually by way of a bank draft or certified cheque. Your real estate lawyer will make arrangements for the land transfer tax to be paid on the closing day.

Are you a First Time Home Buyer?

First time homebuyers in Ontario may be exempt from land transfer tax. To qualify for the first time homebuyers rebate, you must meet all of the following criteria:

• • The purchaser must be 18 years old
  • The property must be your principal residence within nine months of the date of transfer
  • You must be a Canadian citizen or permanent resident.
  • You cannot have previously owned a home, or an interest in a home, anywhere in the world.
  • If the purchaser has a spouse, they also cannot have owned a home or had an interest in a home during the time they were married.

What is the total land transfer tax refund?

The land transfer tax refund is worth a maximum of $4000. This is a refundable tax credit, which means that if the total land transfer tax you owe is less than $4000, you will receive a refund for the difference. If multiple people are buying the property together, the maximum amount will be reduced in accordance with their interest in the property. For example, if two people are buying a property together and each owns 50% of the property, the maximum land transfer tax refund they would be eligible for would be $2000 each.

Why is there an additional land transfer tax Toronto?

In addition to the provincial land transfer tax, when a home is purchased in Toronto, a municipal land transfer tax is applied. As a result, home buyers purchasing in Toronto are charged additional LTT.

If you are a first time homebuyer in Toronto, you may be eligible for land transfer tax rebates of up to $4475 from the City of Toronto land transfer tax. This rebate is in addition to the provincial land transfer tax rebate.

If the buyer becomes a Canadian citizen or permanent resident within 18 months of the transfer, they may apply for and qualify for the land transfer tax rebate.

How is Land Transfer Tax Calculated?

Land transfer tax is calculated on the value of the property being purchased. The tax rates vary depending on the province or territory in which the property is located. In Ontario, for example, the land transfer tax rates in accordance with the purchase price are typically calculated as follows:

Municipal land transfer tax is similarly calculated. When calculating land transfer tax, you can use the https://www.ratehub.ca/land-transfer-tax land transfer tax calculator.

Non-Resident Speculation Tax (NRST)

As of March 30, 2022, the NRST rate was increased to 20% and expanded provincewide. The NRST may apply to the purchase of an interest or residential property that is located in Ontario by individuals who are not Canadian citizens or permanent residents of Canada, foreign national, foreign corporations, or taxable trustees. The NRST is an additional tax to the land transfer tax. Prior to March 30, 2022, the NRST was only charged in the Greater Golden Horseshoe region at a rate of 15%.

If there is a transfer between parent and child, does Land Transfer Tax apply?

Land transfer tax is applicable if there is a transfer of ownership between a parent and child. If the child is receiving the property as a gift, land transfer tax may be waived if the child occupies the property as their principal residence. No money should be paid for the property in order for land transfer tax to be waived and there should not be a mortgage registered on the property. These conditions must be met in order for the land transfer tax to be waived.

Land Transfer Tax Between Spouses?

Land transfer taxes are not payable on transfers between spouses, regardless of whether they are separating or not. However, if the property is transferred from one spouse to the other as part of a divorce settlement, land transfer tax may be payable.