Who Pays Toronto Land Transfer Tax?
Nobody talks about it. It’s one of the most contentious issues at City Hall. It’s a double whammy for buyers in Toronto. Who Pays Toronto Land Transfer Tax.
This Post Is Updated To Include The New Adjustments Announced In Feb 2017
The changes come into effect on Mar 1st 2017
- Added an additional LTT of 0.5% of the value of a residential or non-residential property from $250,000 to $400,000 (an additional $750)
- Added an additional LTT of 0.5% of the value of a residential property above $2 million
- Added an additional LTT of 0.5% of the value above $400,000 of a non-residential property
- Increasing the maximum allowed First-Time Home Buyer Rebate to $4,475, up from $3,725
- Amended the first-time home buyer rebate program eligibility rules to restrict rebate eligibility to Canadian citizens or permanent residents of Canada
- Under the original proposal, first-time buyers would have been forced to pay an additional $475 in Toronto LTT. However, TREB pushed for an increase in the rebate from $3,725 to $4,475, meaning first-time buyers will not face an increase.
- Many first-time buyers would have lost eligibility for the first-time buyer rebate entirely, meaning a total LTT increase of $4,475. TREB pushed back and all first-time buyers will be eligible for a rebate.
- As a result of TREB’s efforts, first-time home buyers will NOT see any change.
Q: How much is the Land Transfer Tax in Toronto and Ontario?
Municipal Land Transfer Tax (MLTT):
0.5% of the first $55K
1% of $55K to $400K
2% of the balance over $400K
Provincial Land Transfer Tax (PLTT):
0.5% of the first $55K
1% of $55K to $250K
1.5% $250K to $400K
2% of the balance over $400K to $1,999,999
2.5% of the balance over $2,000,000.
These rates are for one or two single family residences
Land Transfer Tax Rebates: First Time Home Buyers
Municipal Land Transfer Tax (MLTT): Maximum $3725
Provincial Land Transfer Tax (PLTT): Maximum $4000 (Updated Jan 1st 2017)
A List of Common Toronto Land Transfer Tax Questions
Q: Who Pays Land Transfer Tax in Toronto?
A: Everybody who buys property in Ontario pays Provincial Land Transfer Tax. Condo, single family home, commercial property, it doesn’t matter. Guess what? If you live in Toronto you get to pay it twice (Provincial and Municipal Land Transfer Tax. Yay Toronto!!) Sellers in Ontario do not pay Land Transfer Tax. They have other costs associated with selling a house or condo but that’s for another post.
Q: Is The LTT On Residential Properties The Same as Commercial Real Estate?
No. As of Nov 2016 it was announced that commercial property sales will be subject to a LTT of 2% of the excess of $400,000. This is an increase of 0.5%.
Q: Is There Land Transfer Tax On New Homes In Toronto?
A: Yes.
Q: Is There Land Transfer Tax On New Construction Homes In Toronto?
A: Yes.
Q: Does Land Transfer Tax Apply To Condos In Toronto?
A: Yes you do pay Land Transfer Tax on Condos, both new and resale.
Q: Are There Land Transfer Tax Exemptions In Ontario?
A: Yes. Schools, Universities, Hospitals and Senior Facilities may be exempt. Here’s the list at Toronto City Hall.
Q: Do First Time Home Buyers Pay Land Transfer Tax In Toronto?
A: Yes.
Q: Is There A Land Transfer Tax Rebate For The First Time Home Buyer In Toronto?
A: In order to encourage first time buyer home ownership the Ontario government introduced a rebate to offset the Land Transfer Tax that it had previously introduced as a wealth tax. This rebate still exists (more later). Then the city of Toronto got in on the act and added their own LTT as another tax measure. To placate first time buyers they also offered a rebate. However, that was back when the average house cost less than $350K. Nowadays the rebate is pretty much topped out so it has to be looked at as a lump sum and is a lot less of an overall percentage than it used to be. You cannot own property anywhere else in the world to be eligible. If we’re showing properties don’t expect us to be able to fire off LTT values at will. There are apps and calculators that do a far more efficient job than us and a good financial app would be one of the first things I’d be installing on my phone if I was going out shopping for property.
How Do I Pay Land Transfer Tax In Toronto?
A: Toronto Land Transfer Tax is calculated and filed by your lawyer at closing time. The important thing is not to be caught out at the last minute. It’s a crucial part of the Closing Costs that are a necessary part of the transaction process. It’s the cost of doing business in the city. It is not possible to roll the LTT into your mortgage. First time buyers must pay the tax up front then apply for the rebate.
Recently (late 2015) the province attempted to download a second LTT on all municipalities in Ontario. The proposal was kicked into touch by pretty much everybody faster than you can blink. A lot of people breathed a sigh of relief when that happened.
So you can see how LTT starts to add up as properties increase in value as the have been in the GTA over the last 20 years. The only way to deal with it is to be prepared. Don’t stumble blindly into a wall of closing costs at the last minute. Know your numbers, make sure they work and always plan within budget.
We have more information about tax and rebate issues in our post for First Time Home Buyers Guide In Toronto.
Read more about Closing Costs For Buyers here.
Q: Land Transfer Tax vs Property Tax
A: Be aware that the Land Transfer Tax must not be confused with the yearly Property Tax that homeowners pay the City for services like garbage collection and other benefits associated with living in Toronto. Property Tax is assessed annually but can be challenged under certain circumstances.
Ahh, Taxes, the gift that keeps on giving. If it truly wasn’t worth it at the end of the day everyone would be renting, keep that in mind when juggling the numbers. Real Estate is a long game strategy to build equity and wealth.