ABOUT LAND TRANSFER TAX IN ONTARIO
Ontario Land Transfer Tax
The cost of Land Transfer Tax depends on the purchase price of your house. This cost is based on a marginal tax rate calculated at each portion of the value of your house. Land transfer tax rates in Ontario were last updated in 2017. You can see the marginal tax rates below:
|Purchase Price||Marginal Tax Rate|
|$55,001 – $250,000||1.0%|
|$250,001 – $400,000||1.5%|
|$400,001 – $2,000,000||2.0%|
Don’t forget, if you are a foreign buyer purchasing a home in the Greater Golden Horseshoe, you will be asked to pay a 15% non-resident speculation tax in addition to the Land Transfer Tax amount, both due on closing.
How to Calculate Land Transfer Tax
Here is a quick example of how to calculate Land Transfer Tax in Ontario in case you want to understand how the calculator above works. This does not include a calculation for the additional tax amount you need if you purchase a home in Toronto.
Purchase Price: $800,000
Because our example price is $800,000 it will fit into the 4th marginal tax rate. This means we have 4 tax rate calculations to do to get to our final land transfer tax amount.
1. Take the first tax rate:
$55,000 x 0.5% = $275
2. Now because our price point isn’t in this marginal tax bracket we will use the highest rate in this range. We need to take the highest tax rate and subtract it from the first tax rate.
$250,000 – $55,000 = $195,000
$195,000 x 1.0% = $1,950
3. See #2 for our reasoning in this next calculation. We take the highest tax rate in this margin and subtract it from the second tax rate.
$250,000 – $400,000 = $150,000
$150,000 x 1.5% = $2,250
4. The 4th and final step in our calculation. We’re now in the marginal tax bracket where our purchase price falls. So we need to take our purchase price and subtract the third tax rate.
$800,000 – $400,000 = $400,000
$400,000 x 2.0% = $8,000
5. The final step is to simply add all of our final results above (in bold) to get our land transfer tax rate.
$275 + $1,950 + $2,250 + $8,000
Toronto Land Transfer Tax (Municipal Land Transfer Tax)
We highly doubt you are going to find a country home in Toronto so we won’t be discussing this tax here. Let us know if you disagree. The biggest thing to note is that if you buy a home in Toronto there is an additional tax you will need to pay. The boundary of Toronto can be seen here. For more information on Toronto Land Transfer Tax you can visit RateHub.
Ontario Land Transfer Tax Rebate for First Time Home Buyers
This rebate is only available to first time home buyers and up to a maximum of $4,000.
To be eligible, you must meet the following criteria:
- Be a Canadian Citizen or Canadian Permanent Resident
- Be older than 18 years of age
- Move into the property within 9 months of purchasing the home
- Not have owned a property anywhere else in the world.
- Your spouse cannot have purchase a home anywhere in the world while being your spouse
You can read more about the LLT Rebate for first time home buyers on the Ministry of Finance’s website.