Land Transfer Tax

When purchasing a home, land transfer tax (LTT) is one of the biggest upfront costs buyers face. This is especially true in Toronto, where homebuyers must pay double the land transfer tax compared to other municipalities in Ontario.

Understanding how land transfer tax is calculated, who is eligible for rebates, and how much you’ll need to budget for closing costs is crucial when buying a home.

What Is Land Transfer Tax?

Land Transfer Tax (LTT) is a one-time tax that homebuyers must pay upon closing when purchasing property in Ontario. This tax must be paid upfront and cannot be added to your mortgage.

Who Pays Land Transfer Tax?

✔ All homebuyers in Ontario must pay Ontario’s provincial land transfer tax.
✔ Buyers purchasing in the City of Toronto must pay both provincial and municipal land transfer taxes, effectively doubling their tax obligation.

Ontario Land Transfer Tax Rates (2024)

The Ontario land transfer tax rates are calculated on a sliding scale based on the property’s purchase price:

Purchase PriceTax Rate$0 – $55,0000.5%$55,001 – $250,0001.0%$250,001 – $400,0001.5%$400,001 – $2,000,0002.0%Over $2,000,0002.5%

Land Transfer Tax Calculation Example (Ontario)

📌 Example: Buying a $1,200,000 home in Richmond Hill, ON (outside of Toronto)

1️⃣ $0 – $55,000 → 0.5% = $275
2️⃣ $55,001 – $250,000 → 1.0% = $1,949.99
3️⃣ $250,001 – $400,000 → 1.5% = $2,249.99
4️⃣ $400,001 – $1,200,000 → 2.0% = $15,999.98

📌 Total Ontario Land Transfer Tax: $20,474.96

Toronto Land Transfer Tax (Municipal Tax)

If you are purchasing a home in Toronto, you must pay an additional land transfer tax (only in Toronto) that is equal to the provincial tax, meaning you’ll pay double compared to other Ontario cities.

📌 Example: Buying a $1,200,000 home in Toronto

✔ Ontario Land Transfer Tax: $20,474.96
✔ Toronto Land Transfer Tax: $20,474.96
✔ Total Land Transfer Tax Due on Closing: $40,949.92

First-Time Home Buyer Land Transfer Tax Rebates

💡 Good news for first-time homebuyers! Both Ontario and Toronto offer land transfer tax rebates to help reduce closing costs.

Ontario First-Time Home Buyer Rebate:

✅ Maximum rebate of $4,000

Toronto First-Time Home Buyer Rebate:

✅ Maximum rebate of $4,475

Eligibility for the First-Time Home Buyer Rebate

To qualify for the land transfer tax rebate, you must meet the following criteria:

✔ Be a Canadian citizen or permanent resident.
✔ Occupy the home within 9 months of purchase.
✔ Be at least 18 years old.
✔ Have never owned a home anywhere in the world.
✔ Your spouse must not have owned a home while being your spouse.

📌 Tip: If you are purchasing with a spouse who has previously owned a home, you may only qualify for a partial rebate.

Final Thoughts: How to Prepare for Land Transfer Tax

Land transfer tax is a major cost when buying a home in Ontario, and it’s even higher in Toronto due to the additional municipal tax.

Key Takeaways:

✔ Budget for land transfer tax upfront – It cannot be added to your mortgage.
✔ Toronto homebuyers pay double the tax compared to other Ontario cities.
✔ First-time home buyers can save up to $8,475 with provincial and municipal rebates.

📞 Thinking about buying a home in Ontario or Toronto? Contact us today for expert guidance on closing costs, rebates, and real estate investment strategies!