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Buying your first home comes with many associated costs. Besides appraisal fees, you will need to pay for the land your home sits on. When you purchase a home or land in Ontario, you are subjected to land transfer tax.

What is land transfer tax?

In Ontario, land is referred to as any existing buildings and homes, and those that are to be constructed. Land transfer tax is paid to the province of Ontario as a way for them to let you use their land. When you pay the land transfer tax, the land becomes yours (hence, it is being transferred to you). All provinces, with the exception of Alberta and Saskatchewan require the payment of land transfer tax.

How is LTT calculated?

Land transfer tax is based on the amount you pay for your land or the fair market value of the land (if a lease is being transferred or the land is being given to a shareholder from a corporation).
To calculate land transfer tax on a property, there are factors that are taken into account such as:
  • 0.5% and up to and including $55,000
  • 1% above $55,000 up to and including $250,000
  • 1.5% above $250,000
  • 2% above $400,000 where the land contains 1-2 single family residences

When do you pay land transfer tax?

When you buy your home, the land transfer tax is paid to the province of Ontario as soon as the transaction closes.
Do first-time homebuyers receive rebates on their LTT?
If you are a first-time homebuyer you could be eligible for a refund (or partial refund) for your land transfer tax. You can receive a maximum of $4,475 as a rebate on the Ontario land transfer tax you’re paying. Depending on the price of the home you are purchasing, the rebate could cover the entire amount of the LTT.
For Residential Properties
  • 0.5% on the first $55,000 of the purchase price
  • 1.0% on the amount exceeding $55,000 up to $250,000.
  • 1.5% on the amount exceeding $250,000 up to $400,000.
  • 2.0% on the amount exceeding $400,000 up to $2,000,000.
  • 2.5% on amounts exceeding $2,000,000 (applies to properties with a purchase price of $2 million or more)
Additionally, first-time homebuyers are eligible for a rebate of up to $4,000 on the provincial portion of the LTT.
For the City of Toronto
The City of Toronto also has its own municipal Land Transfer Tax in addition to the provincial tax. The municipal rates are as follows:
  • 0.5% on the first $55,000
  • 1.0% on the amount exceeding $55,000 up to $250,000.
  • 1.5% on the amount exceeding $250,000 up to $400,000.
  • 2.0% on the amount exceeding $400,000 up to $2,000,000.
  • 2.5% on amounts exceeding $2,000,000.
First-time homebuyers in Toronto may be eligible for a rebate of up to $4,475 on the municipal portion of the LTT.
It’s important to note that these rates and rebate amounts may have changed since September 2021. For the most up-to-date and accurate information, I recommend visiting the official website of the Government of Ontario or consulting with a real estate professional or legal expert in Ontario.

Are you eligible for this rebate?

To be eligible for the first-time homebuyers LTT rebate you must be 18 years or older and live in the home within nine months of you purchasing it. If your home is a new construction, you must ensure that it qualifies for a home warranty. Furthermore, your spouse/partner cannot have owned a home while being your spouse/partner. However, if they owned a home prior to marrying you, that is acceptable. Finally, you cannot have owned a home anywhere else in the world to be eligible for the first-time homebuyers land transfer tax rebate. Make sure to apply for the refund within 18 months of buying your home otherwise you will not be able to receive the LTT rebate.
For Toronto homebuyers only
Buying a home in Toronto comes with its own set of land transfer taxes. An additional Toronto LTT will apply when your property closes to cover the municipal land transfer taxes.
For more information on Ontario land transfer tax and our mortgage products contact us today. At Team CP Mortgages our brokers and agents are the best in the industry. We’ll get you the interest rate and the ideal funding package to suit your homebuying needs.

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