Land Transfer Tax Ontario: What Buyers Should Know

Land Transfer Tax Ontario: What Buyers Should Know

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated March 11, 2020

If you’re buying a home, you’ll be paying several fees in addition to the price paid for the home itself. Among all these additional expenses is the land transfer tax, which residents of Ontario are required to pay when they take possession of real property. It’s always the buyer who pays land transfer tax in Ontario when they buy a property, never the seller.

But what exactly is the land transfer tax in Ontario and what should buyers know about it?

Land Transfer Tax in Ontario – Definition

When you purchase property in Ontario, you will be expected to pay a land transfer tax to the province once the deal closes. The amount paid for this specific real estate tax is typically based on the price paid for the property, as well as the amount that remains on the mortgage that’s assumed as part of the deal.

Thinking about getting a rural mortgage? Click here for more information.

The Ontario land transfer tax is paid when the deed to the property is transferred over to you on closing day, which is typically arranged by a real-estate lawyer.

Additional Tax For Non-Residents

As of April 21, 2017, buyers who are not considered to be citizens or permanent residents of Canada and are buying properties located in the Golden Horseshoe area of Southern Ontario, must pay a 15% tax. Referred to as the Non-Resident Speculation Tax, this fee is applicable to foreign buyers in addition to the province’s existing land transfer tax.

To learn more about the 15% Foreign Homebuyer’s tax in Toronto and Victoria, look here.

How is Land Transfer Tax Calculated?

In the province of Ontario, the amount that buyers must pay towards land transfer tax is determined based on the value of the property. This includes the purchase price of the property, any liabilities or benefits that come with the purchase, and the cost of improvements.

The following are the rates charged according to the value of the property:

  • Up to $55,000 inclusive – 0.5%
  • Over $55,000 to $250,000 inclusive – 1.0%
  • Over $250,000 to $400,000 inclusive – 1.5%
  • Over $400,000 – 2.0%
  • Over $2,000,000 with land that features one or two single-family homes – 2.5%

To illustrate this calculation, let’s assume a property has been purchased for $350,000.

  • $55,000 (the first tax bracket) x 0.5% = $275
  • $195,000 ($250,000 – $55,000, representing the next tax bracket) x 1.0% = $1,950
  • $100,000 ($350,000 – $250,000, representing the next tax bracket) x 1.5% = $1,500
  • TOTAL LAND TRANSFER TAX = $3,725

In the above example, you would be required to pay $3,725 in land transfer tax based on a $350,000 home purchase.  

Land Transfer Tax Ontario For First-Time Homebuyers

First-time homebuyers are eligible for a land transfer tax rebate. For those who are purchasing their very first home, there is a $4,000 maximum tax rebate on the land transfer tax in Ontario. Based on the rates associated with this tax, the rebate will cover the entire tax for properties up to a purchase price or value of $368,333.

First-time buyers of properties with a purchase price higher than $368,333 will receive the entire $4,000 tax rebate and will have to pay whatever remains on the balance of the land transfer tax.

In order to be considered a first-time homebuyer in Ontario, you must:

  • Be a Canadian citizen or permanent resident of Canada
  • Be aged 18 years or older
  • Live in the property within 9 months of buying it
  • Never have owned a property previously
  • Apply for the rebate within 18 months of buying the property

If you are married, your spouse may not have owned any real estate anywhere in the world either while being married to you. However, they may have owned property at one time before having married you. Also, if the property you buy is a new build, it needs to qualify for a home warranty.

Want to know how owing taxes affects your ability to buy a house? Read this.

Claiming The Ontario Land Transfer Tax Rebate

In order to claim this tax rebate, a tax rebate application form must be filled out and submitted. An immediate refund can be granted after the land transfer tax is registered and taxes are appropriately filed and paid. If you don’t claim this rebate when you register the land transfer tax, you will need to pay the entire tax amount and make a rebate claim within 18 months.

What’s the difference between a tax credit and a tax deduction in Canada? Find out here

Ontario Land Transfer Tax Exemptions

A tax exemption excludes taxpayers from paying certain taxes – including the land transfer tax in Ontario – and can effectively reduce the amount of taxable income during tax time. There are certain circumstances whereby an exemption to the Ontario land transfer tax may be granted when buying real estate. Land transfer tax exemptions can include any of the following:

  • Land transfers between spouses
  • Land transfers from a person to the family business
  • Land transfers of farming property between family members

It’s important to speak with an accountant or tax specialist regarding whether or not your particular situation makes you eligible for a land transfer tax exemption.

Trying to figure out how to best spend your tax refund? Click here.

Land Transfer Taxes in Toronto

As if paying one land transfer tax wasn’t enough, those who purchase real estate in Toronto will have to pay a municipal land transfer tax on top of the provincial tax. First introduced back in 2007 and implemented in 2008, the municipal land transfer tax for real estate transactions in the Toronto has become increasingly relied on as part of the city’s budget.

Read this to learn about how owing taxes to the Canada Revenue Agency affects your credit score.

The municipal land transfer tax rate for Toronto is calculated based on the sale price of the property in question and whether or not the property is considered residential.   

First-time homebuyers are also eligible for a tax rebate. For the municipal land transfer tax, the rebate is a flat $3,725.

Final Thoughts

Land transfer tax Ontario is just one of the many fees that are associated with buying property. Understanding what these fees are and how much they come to is important to help you budget accordingly. Be sure to speak with your mortgage broker or tax specialist to help you identify all the financial obligations that are associated with buying a home in Ontario.


Rating of 4/5 based on 32 votes.

Lisa has been working as a writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same. She's used a variety of financial tools over the years and is currently growing her money with Wealthsimple, while stashing some capital in a liquid high-interest savings account so that she always has a financial cushion to fall back on. She's also been avidly using her Aeroplan TD credit card to collect as many Aeroplan points as possible to put towards her travels!

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Make Smarter Borrowing Decisions

Whether you have good credit or poor credit, building financial awareness is the best way to save. Find tips, guides and tools to make better financial decisions.

Save With Loans Canada

Special Offers

Build Credit With Refresh Financial

Build Credit With Refresh Financial
Popular

Build credit while spending money with the Refresh Financial VISA card.

View Offer
Build Credit For $7/Month

Build Credit For $7/Month
Popular

With KOHO’s prepaid VISA card you can build a better credit score for just $7/month.

View Offer
Make No Payments Until 2022

Make No Payments Until 2022
Ends Soon

Borrow up to $50,000 from our partner, Fairstone, and don’t pay until 2022*

View Offer
Industry Spotlight

What's happening with Canada's credit industry?

goPeer — Helping Consumers Achieve Financial Freedom by Connecting Canadians Looking For Financing With Canadians Looking to Invest

goPeer — Helping Consumers Achieve Financial Freedom by Connecting Canadians Looking For Financing With Canadians Looking to Invest

goPeer is Canada's first consumer peer to peer lending platform and connects creditworthy Canadians looking for a loan with everyday Canadians looking...

Read Post
Locator
Find The Best Rate
In Your Region
OR
Best Personal Loan Provider by Greedy Rates
Icon

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Keep Track Of Your Credit Score

Subscribe with Credit Verify to monitor your credit rating and get your free credit score.