How much does the Land Transfer Tax in Ontario cost and who is responsible for paying it?

One of the least enjoyable parts of buying real estate or property in Ontario, especially in the City of Toronto is the Land Transfer Tax (LTT). If you are buying property in Ontario, you will be responsible for the provincial Land Transfer Tax (LTT).

If you are buying property in the City of Toronto, you will also be responsible for the City of Toronto’s Municipal Land Transfer Tax (MLTT). Therefore, if you are considering buying real estate in Toronto and/or in Ontario, you will need to budget for paying at Ontario’s Land Transfer Tax and possibly even paying Toronto’s Municipal Land Transfer Tax.

This article explains what Ontario and Toronto’s Land Transfer Taxes are, how much they cost, how the Land Transfer Tax fees are calculated, who is responsible for paying them, who is exempt, and information for non-residents (non-Canadian citizens and/or people who are not permanent residents in Canada) buying property in the City of Toronto or Ontario. 

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What is the Land Transfer Tax (LTT)?

The Land Transfer Tax (LTT) in Ontario is a tax that anyone buying property in Ontario pays upon closing for a real estate transaction. This is a tax you pay when ownership in land is transferred to you. You will pay this tax on every conveyance (transferring the legal title of land from one party to another) tendered for registration and every unregistered disposition for a beneficial interest in land in Ontario, unless this a situation where you would be specifically exempt for paying this tax under the Land Transfer Act or Regulations.

This is part of the Land Transfer Tax Act. This Land Transfer Tax is a tax that is payable for every transfer of land in the province of Ontario based on the value of consideration, whether or not this land transfer is actually registered in Ontario’s land registry system.

Every province in Canada except Alberta and Saskatchewan have a Land Transfer tax, but the provinces of Alberta and Saskatchewan instead charge a much lower transfer fee.

How much does Ontario’s Land Transfer Tax (LTT) cost?

Below are the tax rates for the Land Transfer Tax in Ontario (LTT), for situations when the agreement and purchase of sale were entered into after 14 November 2016 and the registration or the disposition occurred on or after 1 January 2017. The following tax rates for the value of the consideration are below, in this case, the value of consideration is based on the final purchase price for the land or property.

However, the Land Transfer Tax (LTT) is usually based on the amount paid for the land (the gross sale price), in addition to the amount of money that remains for any mortgage or debt assumed as part of the arrangement to buy the land. In some cases, the Land Transfer Tax will be based on the land’s fair market value, such as the following situations:

• the transfer of a lease with a remaining term that can exceed 50 years
• the transfer of land from a corporation to one of its shareholders
• the transfer of land to a corporation, if shares of the corporation are issued.

If you are unsure about how Ontario’s Land Transfer Tax might apply for you, you can read more about Ontario’s Land Transfer Tax here or consult a real estate lawyer.

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Ontario’s Land Transfer Tax rates based on the value of consideration

• Amounts up to and including: $55,000: 0.5% 
• Amounts exceeding $55,000 and up to $250,000: 1.0%
• Amounts exceeding $250,000, up to, and including $400,000: 1.5%
• Amounts exceeding $400,000: 2.0%
• Amounts exceeding $2,000,000, where the land contains one or two single family residences: 2.5% 

Below this are two examples of how to calculate how much you can expect to pay for Ontario’s Land Transfer Tax (LTT)

Calculating the Ontario Land Transfer Tax for a $400,000 property with one single or two single-family residences

55,000 x 0,05 marginal tax rate = $275

250,000 – 55,000 marginal tax rate = $195,000 x 0.01 = $1,950 

400,000 -250,000 = 150,000 marginal tax rate = 150,000 x 0.015 = $2,250

(You would now add all of these totals up for each tax bracket)

Total Ontario Land Transfer Tax: $4,475 

Calculating the Ontario Land Transfer Tax for an $800,000 property with one single or two single-family residences

55,000 x 0,05 marginal tax rate = $275

250,000 – 55,000 marginal tax rate = $195,000 x 0.01 = $1,950 LTT

400,000 -250,000 = 150,000 marginal tax rate = 150,000 x 0.015 = 2,250 LTT

800,000-400,000 = 400,000 marginal tax rate = 400,000 x 0.02 = 8,000 LT

(You would now add up all of the totals for each tax bracket)

Total Ontario Land Transfer Tax: $12,475

If you want to save yourself from having to do these calculations, you can use this free Land Transfer Tax Calculator, which will allow you to input the purchase price for a home you might be interested in, your area to help you see if you will need to pay a Municipal Land Transfer Tax and it will provide you with information about what how much you could expect to pay for your land transfer tax for a property selling at a given price in a given area of Ontario.

How much does the City of Toronto’s Municipal Land Transfer Tax (MLTT) cost?

If you are buying real estate in the City of Toronto, you will also be responsible for paying the City of Toronto’s Municipal Land Transfer Tax (MLTT) in addition to paying Ontario’s Provincial Land Transfer Tax. The tax rates for the City of Toronto’s Municipal Transfer Tax (MLTT) are similar to the rates for Ontario’s provincial Land Transfer Tax (LTT).

The City of Toronto’s website has a free MLTT calculator on their website which can help you to calculate and estimate how much you might be responsible for paying for the Municipal Land Transfer Tax when buying a property or transferring the title for real estate in Toronto to another person. 

Below is a breakdown for Toronto’s Municipal Land Transfer Tax rates for all transfers including sales and unregistered dispositions of beneficial land on or after 1 March 2017.

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For property that contains at least one, and not more than two, single-family residences with a value of consideration of:

Value of Consideration Toronto’s MLTT Rate

Up to and including $55,000.00 0.5%

$55,000.01 to $250,000.01 1.0%

$250,000.01 to $400,000.00 1.5%

$400,000 to $2,000,000.00 2.0%

Over $2,000,000 2.5%

For all other non-single family residences with a value of consideration of:

Value of Consideration Toronto’s MLTT Rate 

Up to and including $55,000.00 0.5%

$55,000.01 to $250,000.01 1.0%

$250,000.01 to $400,000.00 1.5%

Over $400,000.00 2.0%

Toronto’s Municipal Land Transfer Tax Fees

Description Fee $

Toronto’s MLTT Administration Fee*: $79.50 + Harmonized Sales Tax (HST)

This is an administration fee that the City of Toronto charges for processing each MLTT transaction excluding the Harmonized Sales Tax (HST). The HST is payable on the transaction fee.

Toronto’s MLTT Refund Fee: $168.12

This is an administration fee that the City of Toronto charges for processing each Municipal Land Transfer Tax Refund or Rebate request made after the conveyance (title has been transferred) has been electronically registered. 

*Toronto’s MLTT Administration fee is not applicable for properties that qualify for a full exemption under Section 760 (14) of the Toronto Municipal Code and nominal value MLTT transactions where the value of the consideration (VOC) is less than $14,399.00 Canadian Dollars (CDN).

Who is responsible for paying the Land Transfer Tax in Ontario and Toronto?

In Ontario, whenever you acquire land or a beneficial interest inland, you will pay the land transfer tax to the province of Ontario when the title transfer or transaction closes. As mentioned earlier, the Land Transfer Tax (LTT) is usually  (the gross sale price for the property), in addition to the amount of money that remains for any mortgage or debt assumed as part of the arrangement to buy the land.

For the province of Ontario, “Land includes, but is not limited to, any buildings, buildings to be constructed, and fixtures (such as light fixtures, built‑in appliances and cabinetry).” Additionally, if you are buying residential property in the City of Toronto or within Ontario and you are a non-resident i.e. you are not a permanent resident in Canada or a Canadian citizen, if you are a foreign citizen or foreign entity, trusts, and taxable trustees, you might be responsible for paying an additional tax for certain land transfers within the Greater Golden Horseshoe (GGH) region. This tax is the Non-Resident Speculation Tax (NRST) which is 15% of the value of consideration for a residential property. 

The Non-Resident Speculation Tax (NRST) went into effect for all real estate purchases by non-residents in Ontario’s Greater Golden Horseshoe Region (GGH) beginning on 21 April 2017. The Non-Resident Speculation Tax (NRST) is in addition to Ontario’s Land Transfer Tax (LTT) and Toronto’s Municipal Land Transfer Tax (TMLTT) if you are buying property in the City of Toronto. 

The GGH [Greater Golden Horseshoe] region includes the following geographic areas:

• City of Barrie
• County of Brant
• City of Brantford
• County of Dufferin
• Regional Municipality of Durham
• City of Guelph
• Haldimand County
• Regional Municipality of Halton
• City of Hamilton
• City of Kawartha Lakes
• Regional Municipality of Niagara
• County of Northumberland
• City of Orillia
• Regional Municipality of Peel
• City of Peterborough
• County of Peterborough
• County of Simcoe
• City of Toronto
• Regional Municipality of Waterloo
• County of Wellington, and
• Regional Municipality of York.

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Tax refund for Ontario’s Land Transfer Tax for first-time homebuyers 

If you are a first-time homebuyer in Ontario, and you can meet the requirements, you might be eligible for a tax refund for first-time homebuyers for some or all of the Land Transfer Tax (LTT) you might have paid when purchasing your home. This refund applies to the sale of newly constructed and existing homes. Beginning 1 January 2017, the maximum tax refund amount is $4,000 and this only applies to sales that occurred on or after 1 January 2017, regardless of the date when the agreement of purchase and sale was signed. First-time homebuyers who meet the requirements of this program, who were purchasing homes with a value of consideration greater than $368,000 would receive a maximum tax refund of $4,000.

Here are the requirements for first-time homebuyers to claim a tax refund on Ontario’s Land Transfer Tax (LTT):

• You must be at least 18 years of age and you cannot have owned a home or interest in a home anywhere else in the world and if you are buying a home with your spouse, they cannot have ever owned a home or interest in a home, anywhere else in the world while they were your spouse. You cannot qualify for this tax refund if you have previously owned a home whether through inheritance, gift, etc. and you cannot re-qualify as a homebuyer.
• The purchaser must occupy within nine months of the date of transfer as their principal residence.
• You must be a permanent resident in Canada or a Canadian citizen. If you buy your first home and within 18 months of this, obtain permanent residency in Canada or Canadian citizenship, you can apply for the first-time home buyer’s tax refund for Ontario’s Land Transfer Tax (LTT) and submit a claim for the refund to the Ministry of Finance.
• If you are purchasing a home with your spouse who is not a Canadian permanent resident or citizen, you can only get a refund for your portion in the interest of the house, not for their portion of the interest of the house. If your spouse gains permanent residency or becomes a Canadian citizen within 18 months of paying the Land Transfer Tax, you can claim your spouse’s interest in the refund. However, your refund claim with your and your spouse’s combined interest cannot exceed the maximum refund of $4,000. 
• You must apply for this refund within 18 months of registering the title transfer for your new home.

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If you are a first-time homebuyer when you should claim this tax refund for Ontario’s Land Transfer Tax (LTT)

If you qualify for this tax refund, you can claim an immediate refund upon registering the title change for your property by doing the following:

• If you are registering your property electronically, you can complete the required statements under the Explanation tab for the electronic land transfer tax affidavit
• If you are registering this by paper, you can file an Ontario Land Transfer Tax Refund Affidavit For First‑Time Purchasers of Eligible Homes form at the Land Registry Office.

If you claim this refund at the time of registration, this tax refund might offset the Land Transfer Tax you might be responsible for paying. If you do not claim this tax refund when registering your property, you must pay the Land Transfer Tax and submit a refund claim to the Ministry of Finance. No interest is paid on this refund, you can learn more about how to apply for this refund here.

Rebate Information for first-time homebuyers for the City of Toronto’s Municipal Land Transfer Tax (MLTT)

If you are a first-time homebuyer in the City of Toronto, you might be able to qualify for the City of Toronto’s tax rebates for first-time homebuyers when paying the Municipal Land Transfer Tax (MLTT). The requirements for this rebate are the same as for Ontario’s Land Transfer Tax (LTT) rebate and you can learn more about applying for this rebate here.

And you can receive up to $4,475.00 in tax rebates for purchases after 1 March 2017. However, it is important to note that this refund does not apply to commercial, industrial, or multi-residential properties.

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Conclusion

Hopefully, after reading this article, you have gained a greater understanding of what Ontario’s provincial land transfer tax (LTT) is, how much it costs, who is responsible for paying it, and how much you might be able to expect to pay. Ideally, you will have also learned more about rebates and tax refunds available for first-time homebuyers in Ontario and Toronto.

It will allow first-time homebuyers in Ontario to receive a tax refund after paying for the provincial land transfer tax in Ontario and tax rebates for the Municipal Land Transfer Tax in Toronto for first-time homebuyers in Toronto. Buying a home in Ontario is an exciting process, but as mentioned earlier you should be budgeting to pay any additional taxes, closing costs, etc. as well as money for your down payment so when the time comes for you to make an offer on your next home, you will be ready to buy your next home. 

Finally, it is important to note that this article is meant to serve as a jumping-off point for those researching Ontario’s land transfer tax (LTT) and the estimates for how much you might be able to expect to pay for Ontario’s land transfer tax represent estimates, how much the land transfer tax that you will be responsible for paying will depend on the cost of the home or property you are purchasing and other factors.

The rates for the Land Transfer Tax in Ontario and the City of Toronto are subject to change, so if you have any doubts you should consult the City of Toronto or Ontario provincial government’s webpages on the Land Transfer Tax for the most up-to-date information.

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