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What Are Land Transfer Taxes?

Posted on: Thursday May 19, 2016

What are Land Transfer Taxes?

Land Transfer Taxes (LTT) are charges collected by the government to generate revenue for services. In Ontario, acquiring an interest in land will require purchasers to pay a provincial Land Transfer Tax. Those acquiring property in the city of Toronto will incur an additional municipal land transfer tax.

When do Land Transfer Taxes need to be paid?

The LTT is paid by the purchaser when the transaction closes. The transaction will close when the transfer of land is registered with the land registry office. The LTT is factored into the closing calculations. Your real estate lawyer will make this payment on your behalf after receiving funds from you and/or your mortgage lender.

How are Land Transfer Taxes calculated?

The amount of LTT is based on the value/purchase price of the property and can therefore vary significantly. First time home buyers may be eligible for a portion of their LTT to be refunded.

Land Transfer Tax Rates in Ontario

0.5% up to $55,000, plus

1.0% between $55,000 and $250,000, plus

1.5% between $250,000 and $400,000 plus

2.0% above $400,000

Land Transfer Tax Rates in Toronto:

0.5% up to $55,000, plus

1.0% between $55,000 and $250,000, plus

2.0% between 250,000 and $400,000

2.5% when amount exceed $2,000,000, where the land contains one or two single family residences

Example

For example, a property valued at $500,000 would accrue the following LTT’s:

 

Property Purchased in the City of Toronto

Property Purchased outside the City of Toronto

Ontario LTT

$6,475

$6,475

Toronto LTT

$5,725

-

Total LTT

$12,200

$6,475


Written By:
 Vic Bansal, B.A. (Hons.), J.D., Associate Lawyer