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When you buy a house, there are plenty of costs involved in the transaction aside from the purchase price. There are mortgage interest fees, home inspection fees, lawyer fees, and so on.
But one expense that many buyers may not be aware of is the Land Transfer Tax (LTT).
Each province in Canada – with the exception of Alberta and Saskatchewan who charge a lower “transfer fee” instead – charges this tax that is applicable to home purchase transactions. Some municipalities charge their own land transfer tax as well, giving buyers looking to purchase a house in these areas an additional cost to cover.
Let’s dig deeper into Land Transfer Taxes and to find out what you can expect to pay when you purchase a home in each province.
When applying for a mortgage, everyone should avoid these common application mistakes.
When you buy land, you pay a Land Transfer Tax to the province where the transaction takes place. Land transfer taxes are based on the property value, so a higher purchase price will result in a higher LTT.
So, how are land transfer taxes calculated? As mentioned earlier, they’re based on the price of the home. Each province has its own rate that is charged against the property value to calculate how much buyers are responsible for paying in land transfer taxes.
Buyers are the parties in a real estate transaction who pay the land transfer tax – sellers don’t pay. These transfer taxes are paid on closing day when the title of the home is transferred into the buyer’s name.
First time home buyers, however, may be eligible for a rebate on the land transfer tax in certain provinces, either for a partial or full refund.
The following will outline the exact land transfer tax rates in each province to help buyers understand what they can expect to pay when buying in their respective provinces.
The province of Alberta doesn’t charge a land transfer tax to homebuyers. Instead, it charges separate land and mortgage registration fees of $50, plus $1 for every $5,000 of the property value. If there’s a home loan involved, buyers would be charged another $50, plus an additional $1 for every $5,000 of the loan amount.
Like Alberta, Saskatchewan doesn’t have a land transfer tax, but instead charges a title transfer fee to homebuyers that is calculated as follows:
In Manitoba, the land transfer tax fees are charged as follows:
In addition to the land transfer tax, Manitoba also charges a transfer registration fee:
In Ontario, land transfer rates are calculated as follows:
In addition to the Ontario Land Transfer Tax, buyers in Toronto will have another transfer tax to pay – known as the Municipal Land Transfer Tax (MLTT) – which has the same rates as the province of Ontario. So, essentially, the land transfer tax would be double when buying in Toronto.
Quebec’s land transfer tax calculations are based on the following:
Like Toronto, Montrealers also have a separate municipal land transfer tax to pay in addition to the provincial land transfer tax. But unlike Toronto, Montreal’s tax calculations are a bit different from its province’s.
The land transfer tax in New Brunswick is relatively straightforward. Currently, the transfer tax payable is 1% of the property value, according to the Real Property Transfer Tax Act.
Land transfer taxes in Nova Scotia work a bit differently than other provinces. In Nova Scotia, every municipality establishes its own land transfer tax – or “Deed Transfer Tax” – which ranges from 0.5% to 1.5% of the purchase price of a property:
Prince Edward Island (PEI) has a land transfer tax rate of 1% of the purchase price or property value, whichever is greater. Otherwise, there is no land transfer tax applicable to property values of less than $30,000.
Newfoundland and Labrador’s land transfer tax is also known as the Registration of Deeds Act, which is calculated as follows:
As mentioned earlier, certain provinces (as well as municipalities) offer a rebate on land transfer taxes for first-time homebuyers, including Ontario, British Columbia, and PEI.
Some of the most common issues first-time home buyers worry about, click here.
First‑time buyers who purchase a house with a value up to $368,000 will receive a rebate that covers the full amount of land transfer tax that they owe. For first‑time buyers who purchase a house with a price greater than $368,000, they will receive the maximum rebate of $4,000 and have to cover the remaining balance themselves.
Eligibility – The buyer must:
For more information about the first-time homebuyer land transfer tax refunds in Ontario, please check out the government’s website.
Buyers are eligible to receive a rebate of up to $4,475. The eligibility requirements are the same as the province requirements with the addition of the following:
Please take a look at the government of Toronto’s website for more details about the land transfer tax rebate.
In B.C. first-time homebuyers can qualify for either a full land transfer tax exemption or a partial exemption.
In order to receive a full rebate for the land transfer tax, the homebuyer must:
And the property that was purchased:
If you do not meet the above requirements to receive a full exemption of the land transfer tax, you may be eligible to receive a partial refund, if:
The maximum refund that B.C first-time homebuyers can receive is $8,000. For a comprehensive look at the exact amount of land transfer tax you will need to pay based on the price of your property, please visit the Government of British Columbia’s website.
First- time homebuyers in Prince Edward Island are eligible to receive a full refund on their land transfer tax if the following requirements are met:
For a more detailed look at the first-time homebuyer exemption for land transfer tax in PEI, please check out the government’s website.
There is so much to know about buying a home, as it’s not as straightforward as taking out a mortgage, signing a real estate contract, and walking away with the keys in hand. Land transfer taxes need to be understood and budgeted for. And for buyers who are purchasing in provinces or municipalities that offer a rebate, knowing that these refunds exist can help them save tens of thousands of dollars.
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