Residential Land Transfer Tax (LTT) - Ontario & Toronto Explained!

Taxes Taxes Taxes!  The cost of home ownership includes paying taxes to the provincial and municipal governments for a variety of items such as the Land Transfer Tax (LTT).

Land Transfer taxes are a part of every residential real estate transaction in Ontario (however rebates are available for First Time Home Buyers) and should be accounted for as part of the closing cost a buyer requires to pay.

When purchasing a residential property in the province of Ontario, the Provincial government assesses a one time levy which is required to be paid based on the agreed upon purchase price of the property.  If the property is purchased within certain Municipalities of Ontario such as the City of Toronto, then a secondary levy is assessed.  

The Land Transfer Tax is not a straight forward calculation like the HST is, but tiered similarly to income tax where you are taxed at a higher rate when the purchasing price (income) is higher.

Provincial Land Transfer Tax Rates
Home Purchase Price Portion Land Transfer Tax Assessed
$0 to $55,000 0.5%
$55,000 - $250,000 1.0%
$250,000 - $400,000 1.5%
$400,000 and Above 2.0%
Municipal Land Transfer Tax Rates
Home Purchase Price Portion Land Transfer Tax Assessed
$0 to $55,000 0.5%
$55,000 - $400,000 1.0%
$400,000 and Above

2.0%

 
Therefore the Provincial Land Transfer Tax calculation based on a $500,000 house purchased is $6,475.00 due on closing. The break down of the Provincial Land Transfer Tax(PLTT) is below:
 
Provincial Land Transfer Tax
Portion # PLTT Calculation Tax on $500,000 PLTT $ Amount
Portion 1 : $55,000 x 0.5% = $275
Portion 2 : $250,000 - $55,000 = $195,000 x 1.0% = $1,950
Portion 3 : $400,000 - $250,000 = $150,000 x 1.5% = $2,250
Portion 4 : $500,000 - $400,000 = $100,000 x 2.0% = $2,000
Total Land Transfer Tax (1+2+3+4) = $6,475.00
 
Oh but wait!  If you purchase a property in the City of Toronto, there is a secondary one time levy that is applied call the Municipal Land Transfer Tax (MLTT) on top of the Provincial.  (Yes you pay two Land Transfer Taxes if you purchase a property in the City of Toronto)

The Municipal Land Transfer Tax (MLTT) is calculated in the similar manner as the provincial with subtle differences in the tiers.  The MLTT is calculated as follows (Using the same $500,000 purchase price above):

Municipal Land Transfer Tax
Portion # MLTT Calculation on $500,000 MLTT $ Amount
Portion 1 : $55,000 x 0.5% = $275
Portion 2 : $400,000 - $55,000 = $345,000 x 1.0% = $3,450
Portion 3 : $500,000 - $400,000 = $100,000 x 2.0% = $2,000
Total Land Transfer Tax (1+2+3+4) = $5,725.00
 

The Municipal Land Transfer Tax (MLTT) to be paid on closing would be $5,725.00.

If the property was purchased in the province of Ontario with no other MLTT, then the total land transfer tax payable would be $6,475.00.

However, if the property was purchased in the City of Toronto, then the total land transfer tax payable would be (PLTT + MLTT) $6,475.00 + $5,725.00 = $12,200.00

If you are a First Time Home Buyer, then you might be in luck and receive a rebate for the Land Transfer Tax. 

Please contact Nicholas Chan to find out more about Land Transfer Taxes and  First Time Home Buyers rebates and tax credits.

 

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Nicholas Chan

Nicholas Chan

Sales Representative
CENTURY 21 Atria Realty Inc., Brokerage*
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