Understanding land transfer tax and how to calculate yours

Aug 22, 2022

First-time Home Buyer

Closing

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You may also have to pay an additional or separate municipal land transfer tax.

Don't forget your closing costs

When it comes to paying for your new home, you’re not just providing a downpayment, securing a mortgage, and calling it a day. Instead, there are additional closing costs to consider, like your lawyer fees, title insurance, appraisal fees, and the land transfer tax.

What is a land transfer tax?

Anytime you buy a property–which also includes the land it sits on–based on the province or territory you choose to reside, you need to pay the government taxes. Making up the bulk of your closing costs, land transfer taxes are only paid once compared to property taxes which are charged annually. And, because the rate is set as a percentage, that means as your home’s value increases, so does the size of the tax.

And while this transfer fee is imposed anytime a piece of property is transferred to a new owner, depending on the city, it’s important to note, you may also have to pay an additional or separate municipal land transfer tax.

Ontario

In Ontario, the land transfer tax rates are:

0.5% on amounts up to and including $55,000, plus
1.0% on amounts over $55,000, up to and including $250,000, plus
1.5% on amounts over $250,000, up to and including $400,000, plus
2.0% on amounts over $400,000, up to and including $2 million, plus
2.5% on amounts over $2 million

It’s also important to note that in Toronto, there is an additional municipal land transfer tax on top of the provincial tax rate.

Sample Calculation

For example, the land transfer tax for a home in Ontario (outside of Toronto) bought at $500,000 would equal:

0.5% of the first $55,000 = $275

1% of the $194,999 = $1949.99

1.5% of the $149,999 = $2,249.99

2% of the $99,999 = $1,999.98

For a total of: $6,474.96

And, due to the municipal land transfer tax, if this home was purchased in Toronto, the land transfer tax is doubled equaling a total of $12,950.

British Columbia (B.C.)

British Columbia has land property transfer tax rates, which are as follows:

1% for up to and including $200,000, plus
2% of value greater than $200,000 and up to and including $2,000,000, plus
3% of the value greater than $2,000,000, plus
2% on the value greater than $3 million

Sample Calculation

In the province of B.C., the land transfer tax for a home bought at $500,000 would equal:

1% of the first $200,000 = $2,000

2% of the remaining $299,999 = $5,999.98

For a total of: $7,999.98

Land transfer tax refunds for first-time homebuyers

While land transfer taxes may be one of the larger closing costs you’ll have once you secure your home, if you live in Ontario or B.C.you might have some financial reprieve. In these three provinces, first-time homebuyers may be eligible for a tax rebate on their purchase.

Wonder if you’re eligible for a land transfer tax refund? While each province has its own set of criteria, some requirements are that:

You must be at least 18 years old
You must have never owned a home or an interest in a home anywhere else in the world
Your spouse has not owned a home or interest in a home, anywhere in the world while they were your spouse

If you need a bit more help to see if you qualify for the first-time home buyer rebates, apply with Pine and we’ll have one of our mortgage agents get in touch to help you kickstart your home-buying journey.

Ontario

In Ontario, the land transfer tax rates are:

0.5% on amounts up to and including $55,000, plus
1.0% on amounts over $55,000, up to and including $250,000, plus
1.5% on amounts over $250,000, up to and including $400,000, plus
2.0% on amounts over $400,000, up to and including $2 million, plus
2.5% on amounts over $2 million

It’s also important to note that in Toronto, there is an additional municipal land transfer tax on top of the provincial tax rate.

Sample Calculation

For example, the land transfer tax for a home in Ontario (outside of Toronto) bought at $500,000 would equal:

0.5% of the first $55,000 = $275

1% of the $194,999 = $1949.99

1.5% of the $149,999 = $2,249.99

2% of the $99,999 = $1,999.98

For a total of: $6,474.96

And, due to the municipal land transfer tax, if this home was purchased in Toronto, the land transfer tax is doubled equaling a total of $12,950.

British Columbia (B.C.)

British Columbia has land property transfer tax rates, which are as follows:

1% for up to and including $200,000, plus
2% of value greater than $200,000 and up to and including $2,000,000, plus
3% of the value greater than $2,000,000, plus
2% on the value greater than $3 million

Sample Calculation

In the province of B.C., the land transfer tax for a home bought at $500,000 would equal:

1% of the first $200,000 = $2,000

2% of the remaining $299,999 = $5,999.98

For a total of: $7,999.98

Land transfer tax refunds for first-time homebuyers

Wonder if you’re eligible for a land transfer tax refund? While each province has its own set of criteria, some requirements are that:

You must be at least 18 years old
You must have never owned a home or an interest in a home anywhere else in the world
Your spouse has not owned a home or interest in a home, anywhere in the world while they were your spouse

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