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How Much Is Land Transfer Tax in Ontario?

When you buy a home or other property in Ontario, you normally must pay a land transfer tax to the provincial government. This one-time tax is based on the purchase price of the property and is due when the property’s title is transferred to you.

The land transfer tax is a significant closing cost that many first-time homebuyers overlook.

It is important to understand how it is calculated and whether you can reduce it through the first-time home buyer rebate.

What Is Land Transfer Tax in Ontario

Land transfer tax (LTT) is a provincial tax you pay when you buy land or a home in Ontario. The amount you owe depends on your property’s purchase price.

It is paid once at the time the property’s title is registered in your name. The province of Ontario sets the tax and collects it through the land registry system.

How Is Land Transfer Tax Calculated

Ontario uses marginal tax brackets to calculate land transfer tax. That means different parts of the purchase price are taxed at different rates. The rates as of the most recent rules are:

  • 0.5% on the first $55,000
  • 1.0% on the portion from $55,000 to $250,000
  • 1.5% on the portion from $250,000 to $400,000
  • 2.0% on the portion from $400,000 to $2,000,000
  • 2.5% on the portion above $2,000,000

For example, if your home costs $500,000, the tax is calculated as:

  • First $55,000 × 0.5% = $275
  • Next $195,000 × 1.0% = $1,950
  • Next $150,000 × 1.5% = $2,250
  • Final $100,000 × 2.0% = $2,000
    Total LTT = $6,475

This amount must be paid at closing when the property title transfers to you.

Who Pays Land Transfer Tax

In Ontario, the buyer is usually responsible for paying the land transfer tax.

Your real estate lawyer or notary generally calculates this cost and pays it to the province on your behalf at closing.

It is part of your overall closing costs, separate from your down payment and mortgage.

Do First-Time Homebuyers Get a Rebate

Yes. If you qualify as a first-time homebuyer in Ontario, you may receive a rebate on part or all of the land transfer tax. The maximum rebate for first-time buyers is $4,000.

This can cover the entire provincial LTT on homes up to about $368,000 in purchase price.

On more expensive homes, the rebate reduces your tax bill by up to $4,000, with the rest payable at closing.

How the First-Time Home Buyer Rebate Works

To get the rebate, you must meet specific criteria. You must:

  • Be 18 years or older
  • Be a Canadian citizen or permanent resident
  • Never have owned a home anywhere in the world
  • Occupy the home as your principal residence within nine months of purchase
  • Apply for the rebate within 18 months of the land transfer registration date

If you and a spouse are buying together and only one of you qualifies, you may receive a partial rebate based on the qualifying buyer’s share.

What Happens With Higher Price Homes

For homes more expensive than about $368,000, first-time buyers still get the full $4,000 rebate, but must pay the remaining land transfer tax.

For example, if your LTT is $6,000 and you are eligible for the full rebate, you would pay $2,000 at closing.

When You Don’t Qualify for the Rebate

If you have owned a property before, even outside Ontario or Canada, you generally do not qualify for the first-time buyer rebate.

The rebate also does not apply if you do not occupy the home as your principal residence or fail to apply in time.

Does Toronto Have Additional Tax

Yes. If you buy a property in the City of Toronto, you may also owe a municipal land transfer tax (MLTT) on top of Ontario’s provincial tax.

Toronto has its own brackets and rebate for first-time buyers which can add to your total cost, though the rules are separate from the provincial rebate.

How to Claim the First-Time Buyer Rebate

You typically claim the rebate when registering your land transfer. Your lawyer or notary will include a Land Transfer Tax Refund Affidavit for First-Time Homebuyers with your paperwork.

You may also submit the form later if you forget. The official form and instructions are available on the Ontario Ministry of Government and Consumer Services website.

Is Land Transfer Tax Paid at Closing

Yes. The land transfer tax is normally paid at closing, when the property title transfers. Your real estate professional or lawyer handles the payment.

If you qualify for a first-time home buyer rebate, the tax payable may be reduced or eliminated at that time.

What Happens If You Don’t Pay on Time

If the tax is not paid when required, it can delay the registration of your property in your name.

The province may require you to pay the tax and submit additional forms before the title transfer is complete

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