Land Transfer Tax Ontario PPS Law
A land transfer tax, levied by the provincial or territorial government (and sometimes by the municipality government, like Toronto’s too), is typically paid by the buyer of the property and is calculated based on the purchasing price. It is regulated by the Land Transfer Tax Act.
A land transfer tax is not usually mentioned in the listing pricing or in the Agreement of Purchase and Sale (APS). A buyer is required to pay the land transfer tax. However, some buyers, for instance first-time homebuyers are eligible for a rebate of land transfer tax.
A land transfer tax is due at closing and is processed directly through the lawyer. In Ontario, the tax is calculated as a sum of
- 5% on the first $55,000 of the purchase price
- 1% on the portion of the purchase price between $55,000 and $250,000
- 5% on the portion of the purchase price between $250,000 and $400,000
- 2% on the portion of the purchase price over $400,000
- 5% for amounts exceeding $2,000,000 where the land contains one or two single-family residences.
If the property is located in the city of Toronto, in addition to the above land transfer tax, you will be paying:
- 5% of your home’s value up to $55,000
- 0% of any amount between $55,000 and $250,000.
- 5% of any amount between $250,000 and $400,000.
- 0% of any amount between $400,000 and $2 million.
- 5% of any amount between $2 million and $3 million.
- 5% of any amount between $3 million and $4 million.
- 5% of any amount between $4 million and $5 million.
- 5% of any amount between $5 million and $10 million
- 5% of any amount between $10 million and $20,000,000
- 5% of any amount above $20 million
First-time homebuyer rebate: As a first-time homebuyer you are eligible for a rebate but you are still required to pay your land transfer tax. This rebate can be up to $4000.
Exemptions: A transfer between family members such as spouses or children may qualify for exemption. The case may be different for divorcing or divorced spouses. Some farmland and homes in designated regions may be eligible for an exemption.
Failure to pay Land Transfer Tax: the consequence of failure to pay may end up in penalties, interests and even a lien on the property.
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