Land Transfer Taxes (LTT)
Purchasers in most large Canadian centres will need to add Land Transfer Taxes to their list of closing costs.
Unless you live in Alberta, Saskatchewan, or rural Nova Scotia, land transfer taxes (or property purchase tax) are a basic fact of life. These taxes, levied on properties that are changing hands, are the responsibility of the purchaser. Depending on where you live and your purchase price, taxes can range from 0.5% to 4% of the total value of the property.
Many provinces have multi-tiered taxation systems that can prove complicated. In Ontario, f you purchase a property for $260,000 for example, 0.5% is charged on the first $55,000, 1% is charged on the next $55,000 - $250,000, while the $250,000 - $400,000 range is taxed at 1.5%. Your total tax bill? $2,375.00.
If you are a first-time buyer of a resale home, as of December 14th, 2007, you are now eligible for a $2,000 rebate against the Ontario Land Transfer Taxes (LTT). Prior to this date, the rebate was only available for new construction purchases by first-time buyers. Details of this new tax credit are available here.
City of Toronto Municipal Land Transfer Tax (MLTT)
If buying within the City of Toronto, there is a Municipal Land Transfer Tax (MLTT) in addition to the Ontario LTT. As a first-time buyer, you may also qualify for a full rebate of the first $400,000 of the purchase price of your home. To read more details about the City of Toronto's MLTT, click here.
Your lawyer, or a TOPofTO recommended one, will take care of the details to obtain the relevant rebates for you at the time of closing.
The following illustrates how Land Transfer Taxes are calculated in Ontario:
ONTARIO LTT
Land Transfer Tax (go to calculator )
Up to $55,000 X .5 % of total property value
From $55,000 to $250,000 X 1 % of total property value
From $250,000 to $400,000 X 1.5 % of total property value
From $400,000 up X 2 % of total property value
REBATES: 1st time buyer rebate of $2,000 against the Land Transfer Tax of both new or resale houses or condos.
The following illustrates how Land Transfer Taxes are calculated in the City of Toronto:
CITY OF TORONTO MLTT
Land Transfer Tax (go to calculator )
Up to $55,000 X 0.5 % of total property value
From $55,000 to $400,000 X 1 % of total property value
From $400,000 up X 2 % of total property value
REBATES: 1st time buyer credit of up to $3,725 (first $400K of purchase price) against the Land Transfer Tax of both new or resale houses or condos.