Ontario’s Land Transfer Tax is provincial tax payable by the PURCHASER upon the acquisition of an interest in land by registered conveyance or unregistered disposition. Therefore, if you purchase a property or land, you are responsible for paying Land Transfer Tax to the province at the time the transaction closes
What Transactions Qualify – Tax Payable
1 - the purchase of all property whether it be residential or commercial
2 - the transfer of title/ownership of the property into another persons name ie: title is in both parents names and they want to transfer ownership to their only child – the child is responsible for paying Land Transfer Tax.
Refunds and Exceptions to Land Transfer Tax?
1- The transfer of title/ownership of the property into your spouse’s name by way of love and affection – this only applies if you are transferring between spouses; and
2- The transfer of title/ownership of the property from Trustee to Beneficiary (seek legal advice for additional information
Who is Responsible for Paying the Land Transfer Tax?
Every person/entity obtaining an interest in land or property is liable to land transfer tax. The purchaser is responsible for paying Land Transfer Tax, NOT the seller.
When is Land Transfer Tax Payable?
Land Transfer Tax is payable at the time the purchaser is registered as the new owner in the Land Titles Office on closing. First time homebuyers of newly built homes receive their refund immediately. First time home buyers of resale homes must apply to the government for their refund
How is Land Transfer Tax Paid?
The purchaser’s solicitor pays the Land Transfer Tax on behalf of the purchaser on the closing date. The purchaser will be required to provide their solicitor closing funds (certified) that will cover the closing expenses.
How is the Tax Calculated?
The tax is calculated on the value of the consideration for the transfer. In certain circumstances, the Land Transfer Tax Act deems the value of the consideration to be the fair market value of the land.
On transfers of residential real property in Ontario, Land Transfer Tax is calculated on the purchase price (less a GST calculation, if the property purchased is a newly built home). The land transfer tax is payable by the purchaser on the purchase price, upon registration of a Transfer/Deed of Land in the Ontario Land Registry Office on closing based on the following upward sliding scale.
-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
-1.5% on the amount exceeding $250,000, up to and including $400,000, PLUS
-2.0% on the amount over $400,000
(PLEASE NOTE: non-residential properties, such as industrial or commercial real estate, there is no 2% charge since the tax rate is 1.5% for any amount of purchase price over $250,000 regardless of the total price)
If you are buying new from the builder, the Land Transfer Tax is calculated on a price which is net of GST and therefore the Land Transfer Tax will be slightly less for a new home than for a resale home with the same price.
ATTENTION FIRST TIME HOME BUYERS:
First-time buyers of new and re-sale homes are eligible to receive rebates of the provincial land transfer tax.
The maximum provincial land transfer tax (LTT) rebate for first-time buyers is $2,000 and the maximum Toronto LTT rebate for first time buyers is $3,725. A FULL rebate of the Toronto land transfer tax is also available for ALL buyers who entered into Agreements of Purchase and Sale prior to December 31, 2007.
Click HERE for more information on Land Transfer tax rebates available across Ontario.
For additional details pertaining to Land Transfer Tax in Ontario, click HERE
For more information on Land Transfer tax rebates available to Toronto Home Purchaser’s, click HERE
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