Ontario's Land Transfer Tax is a provincial tax payable by the purchaser upon the acquisition of an interest in land by registered conveyance or unregistered disposition. Therefore, if you purchase a property or land you are responsible for paying Land Transfer Tax to the province at the time the transaction closes. If the property you are purchasing is located in Toronto you will also be subject to the Municipal Land Transfer Tax.
How is the Land Transfer Tax Paid?
The purchaser's solicitor pays the Land Transfer Tax on behalf of the purchaser on the closing date. The purchaser will be required to provide their solicitor closing funds (certified) that will cover the closing expenses.
How is the Land Transfer Tax Calculated?
The tax is calculated on the value of the consideration for the transfer. In certain circumstances the Land Transfer Act (Act) deems the value of the consideration to be the fair market value of the land.
On transfers of residential real property in Ontario, Land Transfer Tax (LTT) is calculated on the purchase price (less a HST calculation, if the property purchased is a newly built home). The LTT is payable by the purchaser on the purchase price upon registration of a Transfer/Deed of Land in the Ontario Land Registry Office on closing based on the following upward sliding scale:
- 0.5% on the first $55,000 of the purchase price, plus;
- 1.0% on the amount exceeding $55,000 up to and including $250,000, plus;
- 1.5% on the amount exceeding $250,000 up to and including $400,000, plus;
- 2.0% on the amount over $400,000
- (Please note: non-residential properties, such as industrial or commercial real estate, there is no 2% charge since the tax rate is 1.5% for any amount of purchase price over $250,000 regardless of the total price).
NOTE: If you are buying new from the builder, the Land Transfer Tax is calculated on a price which is net of the HST and therefore the Land Transfer Tax will be slightly less for a new home than for a resale home with the same price.