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Yes, if you’re buying a property in Toronto you will have to pay both: the municipal land transfer tax & the provincial land transfer tax. The municipal land transfer tax was introduced in 2008 to help the government capitalize on the booming real estate industry.
In 2021 – a record year for real estate sales in Toronto – the government earned nearly $5.5 billion from land transfer tax revenue. In 2023, despite the slowdown, the government expects to still earn about $3 billion.
Below is an overview of how the municipal land transfer tax is calculated:
Single Family Residence (max one or two per property)
Up to and including $55,000: 0.5%
$55,000 up to and including $250,000: 1.0%
$250,000 up to and including $400,000: 1.5%
$400,000 to $2,000,000: 2.0%
Over $2,000,000: 2.5%
Non-Single Family Residence
Up to and including $55,000: 0.5%
$55,000 up to and including $250,000: 1.0%
$250,000 up to and including $400,000: 1.5%
Over $400,000: 2.0%
In addition to the total land transfer tax amount – set aside an additional $100 for the municipal land transfer tax administration fee. If you’re applying for a rebate or refund, set aside another $200 for the municipal land transfer tax refund fee.
Using the chart shared above, let’s look at how to calculate Toronto Land Transfer Tax assuming that we’re investing in a property that’s valued at $2,500,000.
Single Family Residence: $62,500
Non-Single Family Residence: $40,000
Note: You will also need to calculate the provincial land transfer tax amount and add it to this to arrive at your total land transfer tax amount. Or, you should just use our calculator that meets you as you enter this page!
Anytime you buy a new property – you’re liable to pay both: the municipal and provincial land transfer tax. Homebuyers pay the land transfer tax before closing the transaction. Your real estate agent or lawyer can help facilitate this payment.
You’re expected to pay the land transfer tax in the last step of the home-buying process – at closing.
On a Toronto resale property, the closing date is shortly after the offer has been accepted. This can be a few days or a few weeks.
On a Toronto pre-construction property, the closing date is typically three to four years later when the building is complete. Purchasers will be notified a minimum of 21 days ahead of the closing date to prepare for all the closing costs and other finances.
Unless you’re a first-time home buyer, land transfer tax payments are not deductible in Toronto or Ontario. On the other hand, if you’re a first-time home buyer, you are eligible for a complete or partial refund provided that:
– property purchased is a newly constructed or resale residential property (multiplexes and commercial properties do not qualify for a rebate)
– the homebuyer is a Canadian citizen or permanent resident that’s at least 18 years old (must be a Canadian citizen within 18 months of the purchase of the property)
– homebuyer must use the purchased property as their primary residence within 9 months of actually buying it
– a homebuyer or their spouse (if any) should not be the owner of any other property – anywhere else in the world
Ontario Land Transfer Tax is always calculated on the final amount paid for the property – which includes the remaining mortgage amount. To find out exactly how much you will have to pay, I recommend using the calculator above. Here’s a simplified version of the formula that the calculator is based on:
VOC: Value of Consideration
LTT: Land Transfer Tax
SFR: Single Family residence
If the property was purchased after 14th November 2016 but registered after 1st January 2017
– Up to and including $55,000: LTT = VOC x 0.5%
– $55,000 up to and including $250,000: LTT = (VOC x 1%) – $275
– $250,000 up to and including $400,000: LTT = (VOC x 1.5%) – $1,525
– $400,000 to $2,000,000 one or two SFR: LTT = (VOC x 2%) – $3,525
– Over $400,000 & NOT an SFR: LTT = (VOC x 2%) – $3,525
– Over $2,000,000: LTT = (VOC x 2.5%) – $13,525
For more information on transitional tax rates and historical land transfer tax rates, you can check out the Government of Ontario’s Website.
Homebuyers always pay the Ontario Land Transfer Tax amount on acquiring a new property, land, or acquiring a significant interest in a similar asset. Sellers never have to pay Ontario Land Transfer Tax on the sale of their property.
While you cannot directly deduct land transfer tax as a rental expense, if you’re a first-time homebuyer, you may be eligible for a full or partial refund of up to $4000 as a land transfer tax rebate.
There’s an exception to every rule and when it comes to family, Ontario may waive your land transfer fee. Instances, where you may be exempt from Land Transfer Tax, are:
– Land transfers between spouses
– Land transfers from a person to the family business
– Land transfers of farming property between family members
If you’re a first-time buyer, you may also be eligible for the First Time Home Buyer Tax Credit. Visit our First-Time Buyer Rebates page to learn more.
