Land Transfer Taxes Explained

When you acquire a property or land, you pay land transfer tax to the province when the transaction closes.

Land transfer tax is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.

In some cases, land transfer tax is based on the fair market value of the land, for example, where:

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

First-time homebuyers

If you are a first-time homebuyer, you may be eligible for a refund of all or part of the land transfer tax.

Read: Land transfer tax refund for first-time homebuyers

Other land taxes

Local municipalities charge a tax on the residential or business property you own. If you have questions about municipal property tax, contact your local municipality. If your property is located in an unorganized territory (an area without municipal organization) of Ontario, property tax is collected through the provincial land tax program administered by the Provincial Land Tax Office in Thunder Bay.

If you buy property in the City of Toronto, you may also pay the City of Toronto's own municipal land transfer tax.

Land transfer tax rates

  The tax rates calculated on the value of the consideration are:

  • 0.5% up to and including $55,000
  • 1% above $55,000 up to and including $250,000
  • 1.5% above $250,000
  • 2% above $400,000 where the land contains one or two single family residences.

The land transfer tax rate is the same for residents and non-residents of Canada.

Calculating the tax amount

Use the table below to calculate land transfer tax.

  • Residential property: land that contains one or two single family residences
  • VC: Value of the consideration for the conveyance or disposition
  • LTT: Land transfer tax payable
For the Value of the Consideration Formula
up to and including $55,000 LTT = VC × 0.005
above $55,000 and up to $250,000 LTT = (VC × 0.01) - $275
above $250,000, for property other than residential LTT = (VC × 0.015) - $1,525
above $250,000 up to $400,000, for residential property LTT = (VC × 0.015) - $1,525
for residential property above $400,000 LTT = (VC × 0.02) - $3,525

Vacant lot with a construction contract

Where a construction contract is entered into as part of the arrangement relating to the purchase of a vacant lot or lots, the value of the consideration is calculated on the:

  • total cost of the lot, plus
  • cost of construction contract,

Value of consideration in foreign currency

All monies must to be expressed in Canadian dollars. The land transfer tax statements must set out the value of the consideration in Canadian dollars. The date of currency conversion should be the:

  • date that the agreement of purchase and sale is accepted and becomes a binding contract, or
  • date of registration if there is  no written agreement.

Paying the tax

Ontario's land transfer tax is payable when the transfer is registered.

If the transfer is not registered within 30 days of closing, you must to submit a Return on the Acquisition of a Beneficial Interest in Land form to the Ministry of Finance, along with the payment of tax within 30 days after the closing date.

Some person(s) do not pay land transfer tax on certain transfers of land. The exemptions include:

  • certain transfers between spouses
  • certain transfers from an individual to his or her family business corporation
  • certain transfers of farmed land between family members
  • certain transfers of a life lease from a non-profit organization or a charity.

A deferral of land transfer tax may be available when land is transferred between affiliated corporations, and notice of the transfer is not registered on title.

Time limits

There is no time restriction where a refund is requested for land transfer tax paid on registration of a notice or caution where the transfer contemplated in the agreement referred to in the notice or caution did not take place.

First time homebuyers refunds requests must be made within 18 months after the date of the transfer.

All other refund requests must be made within 4 years after the date of payment of the tax.

Source: ©2014 Ontario Ministry of Finance.

For more infomration, contact Ontario Ministry of Finance 1 866 ONT-TAXS (1 866 668-8297)

First-time Homebuyers

Land Transfer Tax Refund for First-time Homebuyers

When you buy land or an interest in land in Ontario, you pay land transfer tax. First-time homebuyers of an eligible home may be eligible for a refund of all or part of the tax.

How much money could I receive?

The maximum amount of the refund is $2,000.

For example:

Cost of HomeTax PayableTax RefundNet Tax Payable
$100,000 $725 $725 $0
$200,000 $1,725 $1,725 $0
$300,000 $2,975 $2,000 $975

If the refund is claimed at time of registration, it may offset the land transfer tax ordinarily payable. If not claimed at registration, the refund may be claimed directly from the Ministry of Finance, within 18 months after the transfer. No interest is paid on this refund.

Do I qualify?

To get a refund of land transfer tax, you:

  • must be at least 18 years old
  • must occupy the home as your principal residence within nine months of the date of transfer
  • cannot have ever owned an eligible home, or an interest in an eligible home, anywhere in the world, and
  • if you entered into an agreement of purchase and sale before December 14, 2007, the eligible home must be newly constructed and you must be eligible for  the Tarion New Home Warranty.

If you have a spouse, your spouse cannot have owned an eligible home, or an interest in an eligible home, anywhere in the world while being your spouse.
You must apply for a refund within 18 months after the date of the transfer.

How do I get the refund?

If you qualify, you can claim an immediate refund at time of registration in one of two ways:

  • If registering electronically, complete the required statements under the "explanation" tab of the land transfer tax statements.
  • If registering on paper, file an Ontario Land Transfer Tax Refund Affidavit For First-time Purchasers of Eligible Homes at the Land Registry Office.

Definitions

"qualifying home" means,

  1. for agreements of purchase and sale entered into before December 14, 2007, a newly constructed home, and
  2. for agreements of purchase and sale entered into after December 13, 2007, an eligible home.

"eligible home"  is defined as follows:

  1. a detached house;
  2. a semi-detached house, including a dwelling house that is joined to another dwelling house at the footing or foundation by a wall above or below grade or both above and below grade;
  3. a townhouse;
  4. a share or shares of the capital stock of a co-operative corporation if the share or shares are acquired for the purpose of acquiring the right to in-habit a housing unit owned by the corporation;
  5. a mobile home that complies with the Canadian Standards Association Standard CAN/CSA-Z240 Mobile Homes and is suitable for year round permanent residential occupation;
  6. a condominium unit;
  7. a residential dwelling that is a duplex, triplex or fourplex;
  8. a partial ownership interest as a tenant in common of real property if the ownership interest was acquired for the purpose of acquiring the right to inhabit a housing unit forming part of the real property;
  9. a manufactured home that is manufactured in whole or in part at an offsite location, that is intended for basement installation, that is suitable for year round permanent residential occupation and that complies with,
    1. the Building Code made under the Building Code Act, 1992;
    2. if the manufactured home is constructed in sections that are not wider than 4.3 metres, Canadian Standards Association Standard Z240.2.1 Structural Requirements for Mobile Homes and Canadian Standards Association Standard Z240.8.1 Windows for Use in Mobile Homes; or
    3. if the manufactured home is constructed in sections that are 4.3 metres or wider, Canadian Standards Association Standard A277 Procedure for Certification of Factory Built Houses, or
  10. any other residential property as may be prescribed.

"newly constructed home" means a home in respect of which the purchaser is entitled to a warranty under section 13 of the Ontario New Home Warranties Plan Act (ONHWPA) and which is sold to the purchaser by a vendor as defined in ONHWPA.

"purchaser" means an individual who is at least 18 years of age and who has never owned an eligible home anywhere in the world and whose spouse has not owned an eligible home anywhere in the world while he or she was a spouse of the individual.

"spouse" means spouse as defined in section 29 of the Family Law Act.  At present, "spouse" means either of two persons who are married to each other, or who are not married to each other and who have cohabited,

  1. continuously for a period of not less than three years, or
  2. in a relationship of some permanence, if they are the natural or adoptive parents of a child.

Requirements to Qualify for a Refund

Eligibility Requirements

  • The purchaser must occupy the home as his or her principal residence no later than nine months after the date of the conveyance or disposition.
  • The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
  • If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world, while he or she was the purchaser's spouse. If this is the case, no refund is available to either spouse.
  • The purchaser cannot have previously received an Ontario Home Ownership Savings Plan (OHOSP)-based refund of land transfer tax.

 

Facebook
Social Media

Recently Tweeted
Contact Info
Agent
Audice Nasser

MBA, Broker

World Class Realty Point Brokerage

240 Duncan Mill Road, Suite 403
North York  Ontario M3B 3S6

416-890-9882 audice@mytorontohomesale.com