Land Transfer Tax – Part 1

Top 5 Questions About Ontario and Toronto Land Transfer Tax

Land Transfer Tax is something that we get asked about all the time. We’re going to answer the top 5 questions we’re asked about Ontario and Toronto land transfer tax. If your question isn’t answered here, please contact us. We’ll get right back to you.

1. I’m buying a house in Toronto. How much land transfer tax will I have to pay?

The first thing to know is that land transfer tax is levied by both the City of Toronto and the Province of Ontario. If you’re purchasing within the City of Toronto, then you’ll have to pay both the provincial land transfer tax and the municipal land transfer tax. Contact Down & Company and we’ll let you know what exemptions and rebates you might qualify for and the amount of land transfer tax you’ll have to pay.

The provincial land transfer tax is calculated as follows:

  • 0.5% of the value of the consideration up to and including $55,000;
  • 1% of the value of the consideration which exceeds $55,000 up to and including $250,000;
  • 1.5% of the value of the consideration which exceeds $250,000; and
  • 2% of the amount by which the value of the consideration exceeds $400,000 for land that contains at least one and not more than two single family residences.

The municipal land transfer tax is calculated as follows:

  • 0.5% of the value of the consideration up to and including $55,000;
  • 1% of the value of the consideration which exceeds $55,000 up to and including $400,000.00; and
  • 2% of the amount by which the value of the consideration exceeds $400,000.00.

You can find out how much land transfer tax you’ll have to pay on our Quote page.

2. I’m buying a house in Toronto. When do I have to pay land transfer tax?

Land transfer tax must be paid at the time the transfer is registered. If Down & Company assists you with your residential real estate closing in Toronto, we will remit the land transfer tax on your behalf.

3. I’m buying a house in Toronto. Do I qualify for the first-time homebuyer’s land transfer tax rebate?

If you qualify for the first-time homebuyer’s rebate, you can reduce your provincial land transfer tax by up to $2000 and your municipal land transfer tax by up to $3725 of the amount that you’d otherwise owe.

To qualify for the first-time homebuyer’s land transfer tax rebate you must meet the following criteria:

  • You must be 18 years of age or older.
  • You must occupy the home as your principal residence no later than nine months after the date of the conveyance or disposition.
  • You cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
  • If you have a spouse, your spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world, while he or she was the your spouse. If this is the case, no refund is available to either spouse.
  • you have not previously received an Ontario Home Ownership Savings Plan refund of land transfer tax.

If you qualify, Down & Company will claim this rebate for you electronically when we complete your purchase so that you pay only the net amount of land transfer tax payable after the rebate.

4. Are there any exemptions to land transfer tax?

Yes, there are a few exceptions and they’re quite limited. The exemptions apply to, among other things:

  • certain transfers between spouses
  • certain transfers from an individual to their family business corporation
  • certain transfers of farmed land between family members
  • certain transfers of a life lease from a non-profit organization or a charity.

Although not technically an exemption, we note that land transfer tax may not be payable on certain conveyances of land where no consideration changes hands (however, land transfer tax will still payable on the value of any registered mortgages conveyed with the land).

If you’d like more information about exemptions to land transfer tax please contact us. Alternatively, you can read the bulletins on the Ministry of Finance’s website.

5. I own a home in Toronto and I want to transfer title to my spouse. Do I have to pay land transfer tax?

As we mentioned above, certain transfers between spouses are exempt from land transfer tax. More specifically, land transfer tax does not apply to conveyances where the transferor is the spouse or former spouse of the transferee and where:

(a)    the only consideration given for the conveyance apart from natural love and affection is the assumption of any encumbrance registered on the land described in the conveyance;

(b)   the conveyance is in compliance with the terms of a written agreement pursuant to which the parties have agreed to live separate and apart; or

(c)    the conveyance is in compliance with the direction of an order or judgment made by a court of competent jurisdiction.

If you would like to discuss a transfer of title to your spouse, land transfer tax, or any other issue related to a residential real estate closing in Ontario, please contact us today.

Painting by Katerina Podolak · Rain in Camden Town