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What Is Land Transfer Tax In Ontario?
Ontario Land Transfer Tax Explained
Land transfer tax is a mandatory government tax home buyers, in most Canadian provinces, must pay when purchasing a property. All Canadian provinces have their Provincial Land Transfer Tax, with the exception of Saskatchewan and Alberta, who have a lower provincial transfer fee.
First time home buyers in Ontario are eligible for Ontario First Time Home Buyer Tax Credit Rebate, and the Toronto First Time Home Buyer Tax Credit Rebate. Both tax credits are instant rebates applied to the final land transfer tax amount.
How To Calculate Ontario Land Transfer Tax
Land Transfer Tax Calculation Explained
The Ontario land transfer tax is calculated as a percentage of the property purchase price, and based on a sliding scale system. When calculating the land transfer tax for Ontario, you must use the purchase price of the property, as well as discount the first time home buyer rebate
Home buyers in Toronto, Scarborough, North York, Etobicoke, York (Municipality of York not York Region) are subject to an additional land transfer tax, know as the Toronto Land Transfer Tax. Home buyers purchasing real estate outside of Toronto are only subject to the Provincial Land Transfer Tax.
Example Ontario Land Transfer Tax Calculation
For a home purchase price of $450,000 in Hamilton, Ontario:
- The first $55,000 of purchase price is taxed at rate of 0.5% ($275)
- Then the next $195,000 ($55,000.01 to $250,000.00) is taxed at a rate of 1.0% ($1,950),
- Then the next $150,000 ($250,000.01 to $400,000.00) is taxed at a rate of ($2,250)
- The remaining $50,000 of the purchase price, based on the tax bracket of $400,000.01 to $2,000,000 is taxed at a rate of 2.0% ($1,000)
- The total land transfer tax amount in this example will be $5,475
If the home purchaser is a first time home buyer, they will receive an instant rebate of $4,000 (the maximum Ontario land transfer tax rebate amount). They will pay $1,475 for the Ontario Land Transfer Tax.
How Ontario Land Transfer Tax is Calculated
See Chart Below To See How Land Transfer Tax Is Calculated In Ontario
Tax Rate For This Bracket
Tax Amount For This Bracket
$55,000.01 to $250,000.00
$250,000.01 to $400,000.00
$400,000.01 to $2,000,000.00
Ontario First Time Home Buyer Tax Credit (Ontario Land Transfer Tax Rebate)
First Time Home Buyer Rebate Explained
The Ontario first time home buyer tax credit, also known as the land transfer tax rebate, has a value of the full amount of the Ontario land transfer tax up, to a maximum $4,000. The land transfer tax rebate is instantly applied as credit as a rebate to the home buyers at the time of closing or their real estate purchase transaction. First time home buyers whom purchase a property for $368,333 or lower will be rebated the full amount of the Ontario Land Transfer Tax ($4,000 value).
Requirements For Ontario First Time Home Buyer Tax Credit (Ontario Land Transfer Tax Rebate)
- Purchaser(s) must be a Canadian Citizen or have Permanent Resident (PR) Status in Canada
- Must be at least 18 years of age
- Purchasers must live in the home within 9 (nine) months of the purchase date
- Cannot have owned a property in any other country in the world
- Purchasers spouse cannot have owned any real estate while being your spouse