Anyone who buys property or condos in Ontario is charged a land transfer tax by the government, which must be paid when the interest in land is registered. In Toronto, there are two components to the land transfer tax:
- the Municipal Land Transfer Tax, which is paid to the City of Toronto and
- the Provincial Land Transfer Tax, which is paid to the province.
There are exemptions and rebates available for each component. Contact us today to consult with one of our Richmond Hill real estate lawyers who can help you determine how land transfer tax is calculated in Toronto and whether you qualify for a rebate.
Will You Have to Pay Land Transfer Tax?
Land transfer tax is payable when:
- an interest in land is conveyed from one person to another, or
- a beneficial interest in land is disposed of.
“Land” is defined quite broadly and can include bare land, land with structures or buildings, fixtures and even, in some circumstances, a structure that has not yet been built. Land transfer tax applies to different types of interest in land, including ownership interests, leasehold interests, and the interests of an optionee.
There is an exemption available for first-time homebuyers. To qualify, you must:
- be at least 18 years old,
- not have owned property before (anywhere in the world),
- be a Canadian citizen or permanent resident,
- move into the home within 9 months of purchase.
Municipal and Provincial Land Transfer Tax Rates
Land transfer tax is generally calculated based on the purchase price of the land, which is often called the consideration. In some instances, such as long-term leases, the land transfer tax is calculated based on the fair market value of the land.
As of January 1, 2017, the rates for Provincial Land Transfer Tax are:
- 0.5% on the first $55,000 of consideration
- 1% on any amount between $55,000 and $250,000
- 1.5% on any amount above $250,000
- 2% on any amount above $400,000 (on residential properties only).
As of January 1, 2017, the rates of Toronto’s Municipal Land Transfer Tax are:
- 0.5% on the first $55,000 of consideration
- 1% on any amount between $55,000 and $250,000
- 1.5% on any amount between $250,000 and $400,000
- 2% on any amount between $400,000 and $2 million
- 2.5% on any amount above $2 million (on residential properties only).
The purchaser or person receiving the beneficial interest in land is responsible for both the Municipal Land Transfer Tax and the Provincial Land Transfer Tax. Online calculators are available to estimate land transfer tax. However, you should still consult your real estate lawyer before making any commitments regarding real estate.
Residential vs. Commercial Property
The primary difference between the treatment of residential and commercial (or non-residential) properties is that commercial properties do not qualify for the first-time homebuyer exemption, even if the purchaser has never owned property before.
There is also a difference between the provincial land transfer tax rates for residential and commercial properties valued at over $400,000 and between the municipal land transfer tax rates for residential and commercial properties valued at over $2 million.
Contact Our Real Estate Lawyers Today
Your real estate lawyer can answer any questions you have about how land transfer tax is calculated in Toronto and ensure that the calculations are done properly. Our Richmond Hill real estate lawyers are available to help you with all your real estate transaction needs. Contact us today to get started. Contact our law office by dialing 905-884-9242 now.
* Please note that the information in this article is not intended as legal advice, but rather as a general overview on the subject. If you are seeking legal advice, please consult with a lawyer.
