It is best to be fully aware of hidden costs when purchasing a home. In addition to providing a down payment, you will need extra cash for closing expenses. In this article, we will examine the Ontario Land Transfer Tax, including Ontario’s Land Transfer Tax Rebate, if you are a first-time home buyer. Furthermore, we make the process easier with our land transfer tax calculator for Ontario.
Whenever a property in Ontario is bought or sold, buyers pay the Ontario Land Transfer Tax. Property subject to this tax includes condos, townhouses, pre-construction condos, land, and buildings. Suppose that you purchase any real estate in the Greater Toronto Area. In such cases, you pay the municipal Toronto Land Transfer Tax and the provincial Ontario Land Transfer Tax.
When is land transfer tax paid?
This tax is paid on the property’s closing date. Sellers never pay these taxes, only the buyer. For resale properties, your closing date is shortly after accepting an offer. It can be a matter of several days or weeks.
For pre-construction property, closing dates are three to four years after building completion. Purchasers receive a notification 21 days before closing to prepare for other finances and closing expenses.
How much is land transfer tax?
The amount owed depends on the property’s purchase price. As mentioned earlier, properties in the Greater Toronto Area will pay both provincial and municipal fees.
Who can receive the Ontario Land Transfer Tax Rebate?
First-time home buyers can save a total of $8,475 with Ontario’s First-Time Home Buyer Tax Rebate. Eligible individuals can obtain a maximum refund of $4,000 on the Provincial Land Transfer Tax and $4,475 on the Municipal Land Transfer Tax.
However, to qualify, you must:
- Be over 18 years old.
- Occupy the home within nine months of purchasing the property.
- Be a permanent Canadian resident.
- Not previously owned another house locally or globally. If your spouse has owned a home previously and you are married, you are ineligible for the rebate.
How to Obtain the Rebate
You must apply for the Ontario Land Transfer Tax Rebate within 18 months of your purchase to receive the First-Time Home Buyer Land Transfer Tax Rebate. This form can be used to apply for your Ontario Land Transfer Tax Refund.
Exceptions
Ontario will waive the land transfer fee if it is transferred between spouses, farming property between family members, and from an individual family member to family businesses.
Other Considerations
Non-residents purchasing property in Ontario’s Greater Golden Horseshoe area will pay a 15% Non-Resident Speculation Tax, plus the Land Transfer Tax in Ontario. These can be viewed here.
Your Guide for Land Transfer Tax in Ontario
The easiest method is to use our land transfer tax calculator in Ontario. At Northwood Mortgage, we also offer many other services, from fixed-term mortgages and open mortgages to first mortgage solutions and mortgage rates. If you have any questions, please call 416-969-8130 or 888-495-4825 to book an appointment or contact us here.
