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. But what exactly is the land transfer tax in Ontario, and what should buyers know about it?
Key Points
- Land transfer tax in Ontario is to be paid by the buyers not the sellers of the property.
- The land transfer tax amount is based on the property value. Tax rates range from 0.5% to 2.5%. Properties valued over $3 million will incur an additional “luxury home” tax.
- Properties in Toronto are subject to an additional municipal land transfer tax.
- First-time homebuyers in Ontario are eligible for a land transfer tax rebate of up to $4,000. First-time homebuyers in Toronto are eligible for a municipal land transfer tax rebate of $4,725.
- Foreign buyers are currently banned from buying residential properties with 3 or less dwelling units until January 1, 2027.
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.
The Ontario land transfer tax is paid when the deed to the property is transferred over to you on closing day. This is typically arranged by a real estate lawyer.
Who Pays The Land Transfer Tax In Ontario?
Do note that it’s always the buyer who pays the land transfer tax in Ontario when they buy a property, never the seller.
How Much Is The Land Transfer Tax In Ontario?
In Ontario, the land transfer tax amount that buyers must pay is 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:
| Property Price | Marginal Tax Rate |
| 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 to $2 million | 2.0% |
| Over $2 million with land that features one or two single-family homes | 2.5% |
Source: Ontario.ca
Land Transfer Tax Rates In Toronto
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 Toronto has become increasingly relied on as part of the city’s budget.
Surrounding areas that are part of the GTA, such as Brampton, Vaughan, Markham, and Mississauga, are exempt from the municipality tax as they are not part of the City of Toronto.
The graduated Municipal Land Transfer Tax (MLTT) for Toronto ranges from 3.5% to 7.5%. These new MLTT rates apply to properties that:
- Are valued over $3 million.
- Contain at least one, but not more than 2 single-family residences.
| Property Price | Rate |
| Over $3,000,000 and up to $4,000,000 | 3.5% |
| Over $4,000,000 and up to $5,000,000 | 4.5% |
| Over $5,000,000 and up to $10,000,000 | 5.5% |
| Over $10,000,000 and up to $20,000,000 | 6.5% |
| Over $20,000,000 | 7.5% |
How To Calculate The Land Transfer Tax In Ontario
To illustrate this calculation, let’s assume a property has been purchased for $300,000. The total land transfer tax = $2,975 ($275 + $1,950 + $750).
| Purchase Price ($300,000) | Marginal Tax Rate | Land Transfer Tax Amount |
| $55,000(represents the first tax bracket) | 0.5% | $275 |
| $195,000 ($250,000 – $55,000 representing the next tax bracket) | 1.0% | $1,950 |
| $50,000($300,000 – $250,000, representing the next tax bracket) | 1.5% | $750 |
Discount For 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 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.
Discount For First-Time Homebuyers In Toronto
First-time homebuyers are also eligible for a tax rebate. For the municipal land transfer tax, the rebate is a flat $4,725.
How To Claim 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.
Real Estate Ban For Non-Residents
The Government of Canada recently introduced the Prohibition on the Purchase of Residential Property by Non-Canadians Act, which prohibits non-Canadians from purchasing residential property in Canada for 2 years. On February 4, 2024, the government extended this ban on foreign ownership of housing in Canada until January 1, 2027.
Properties that are prohibited from being bought by foreign buyers include residential buildings with 3 dwelling units or less. The Act does not prohibit the purchase of buildings with 4 or more units.
Certain exceptions exist in certain circumstances.
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 25% tax. Referred to as the Non-Resident Speculation Tax (NRST), this fee applies to foreign buyers in addition to the province’s existing land transfer tax.
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.
Final Thoughts
Land transfer tax in 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.
Land Transfer Tax FAQs
How much are the land transfer taxes in Toronto?
When do I have to pay land transfer taxes in Ontario?
Can I get a refund on the land transfer taxes if I’m not a first-time buyer?
Who can qualify for the land transfer tax rebate in Ontario?
- 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
