Land Transfer Tax in Ontario
In Canada, one of the largest closing costs any homebuyer will face is land transfer tax. Almost every province charges a land transfer tax (LTT) to the buyer, except for Alberta and Saskatchewan who instead levy a much smaller fee. The LTT varies slightly in each province, so the amount you pay in one province may not be the same in another. In this blog series, we want to explain how LTT works in your province or city. Today, let’s look at the Ontario land transfer tax.
Ontario’s Land Transfer Tax
In Ontario, the land transfer tax calculation is based on four different home price ranges and marginal tax rates; essentially, the amount of LTT you will owe depends on how much you paid for your home. Using the chart below, you can begin to see how the Ontario land transfer tax is calculated.
In Ontario:
- The first $55,000 of your purchase price is subject to a 0.5% tax rate ($55,000 x 0.5%).
- The amount you paid between $55,000 and $250,000 is subject to a 1.0% tax rate [($250,000 – $55,000) x 1%].
- Anything between $250,000 and $400,000 is subject to a 1.5% tax rate [($400,000 – $250,000) x 1.5%].
- And if you paid more than $400,000 for your home, the amount you paid between $400,000 and the purchase price is subject to a 2.0% tax rate [(house price – $400,000) x 2%].
Example Ontario Land Transfer Tax Calculation
According to the Canadian Real Estate Association (CREA), the average Ontario home price is $409,192. Using a home priced close to this average, we’ll calculate the Ontario land transfer tax with our land transfer tax calculator.
The 3-bedroom and 2-bathroom home listed above is located in Cambridge and is priced at $404,900. Enter these details into the land transfer tax calculator and you’ll see that the total Ontario land transfer tax for this home would be $4,573.
To reach that number, our calculator ran the asking price of $404,900 through the price ranges and marginal tax rates we listed above:
- The first $55,000 would cost the buyer $275 ($55,000 x 0.5%)
- The next $195,000 ($250,000 – $55,000) is another $1,950 ($195,000 x 1%)
- The next $150,000 ($400,000 – $250,000) is another $2,250 ($150,000 x 1.5%)
- And the last $4,900 ($404,900 – $400,000) is another $98 ($4,900 x 2%)
So the total Ontario land transfer tax for this home would be: $275 + $1,950 + $2,250 + $98 = $4,573.
Ontario Land Transfer Tax Rebate
If you are a first-time homebuyer in Ontario, you may be eligible for Ontario’s land transfer tax rebate. The maximum rebate you can receive is $2,000 which, based on Ontario’s land transfer tax rates, would pay for the full land transfer tax on homes priced up to $227,500. For homes priced over $227,500, the maximum land transfer tax rebate you can receive is $2,000.
To find out how much of a rebate you may be eligible for, simply check off the “I am a first-time home buyer” box on our land transfer tax calculator.
When you are considering buying a home, it’s important that you know all of the closing costs ahead of time, so you can budget your finances accordingly. As you can see, your Ontario land transfer tax can quickly add up. But if you qualify as a first-time buyer, you may be eligible to receive a land transfer tax rebate of up to $2,000.