Land Transfer Tax 101

As a first-time home buyer in Ontario, there are various terms you may be unfamiliar with during the home-buying process. One of those terms is called Land Transfer Tax. It is essential to know this term because it is a critical element in owning a home. If you are a first-time homebuyer looking to enhance your knowledge of land transfer taxes this is the article for you.

What are land transfer taxes? Land Transfer Tax is the tax you pay on real property (plot of land) when you purchase a plot of land or an interest in land. If you acquire a piece of land or have an interest in a piece of land, taxes are paid on any  houses, condos, buildings to be constructed and fixtures.

Who pays land transfer tax? When the deed is transferred to your name (Closing day),  your lawyer would usually arrange for the land transfer tax to be paid to the province of Ontario or the province in which you are buying in. Buyers in Toronto usually have to pay an additional tax called Toronto Land Transfer Tax. Buyers are usually responsible for paying land transfer taxes. 

If you are a first-time buyer, you may be eligible for a refund of all or part of the tax. To claim this refund, participants have to meet the following criteria:

  • Must be at-least 18 years of age or older
  • A permanent resident or Canadian citizen
  • Cannot own a home or have an interest in a home anywhere in the world.
  • A spouse cannot own a home or have an interest in a home, anywhere in the world while he or she was your spouse
  • Have previous ownership of a home.
  • The purchaser must occupy the home as their principal residence within nine months of the date of transfer.
  • If the buyer entered into an agreement of purchase and sale before December 14, 2007, the home must be a newly constructed home and the purchaser must be eligible for the Tarion New Home Warranty.

Wondering how much your land transfer tax will be? Use the calculator here: https://www.landtransfertaxcalculator.ca/