Ontario Land Transfer Tax (LTT)
In general, if you buy land or an interest in land in Ontario, you must pay Ontario’s land transfer tax. The land transfer tax payable is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.
In some cases, land transfer tax is based on the fair market value of the land, for example, where:
- a lease can exceed 50 years;
- land is transferred from a corporation to one of its shareholders; or
- land is transferred to a corporation, if shares of the corporation are issued.
Effective January 1, 2017, the tax rates for land transfer tax will depend on the date of the agreement of purchase and sale.
If an agreement of purchase and sale is entered into after November 14, 2016, and registration or the disposition occurs on or after January 1, 2017, the tax rates on the value of the consideration are as follows:
amounts up to and including $55,000: 0.5%
amounts exceeding $55,000, up to and including $250,000: 1.0%
amounts exceeding $250,000, up to and including $400,000: 1.5%
amounts exceeding $400,000: 2.0%
amounts exceeding $2,000,000, where the land contains one or two single family residences: 2.5%.
For a transfer of land or disposition of beneficial interest in land in which the value of the consideration equals $400,000:
multiply $55,000 by 0.5% (55,000 × 0.005) = $275
multiply the amount exceeding $55,000 up to $250,000 by 1.0% (195,000 × 0.01) = $1,950
multiply the amount exceeding $250,000 up to $400,000 by 1.5% (150,000 × 0.015) = $2,250.
Total land transfer tax payable = $4,475.
Land Transfer Tax (provincial) FAQs: http://www.rev.gov.on.ca/en/tax/ltt/faq.html
Municipal Land Transfer Tax (MLTT)
In addition to Ontario’s land transfer tax, transfers of land located in the City of Toronto may also be subject to the City of Toronto’s own municipal land transfer tax. As a taxation measure granted under the City of Toronto Act, 2006, Toronto City Council approved a new Municipal Land Transfer Tax effective February 1, 2008 that applies to purchases on all properties in the city of Toronto in addition to the Province’s Land Transfer Tax.
The MLTT will be charged on a graduated basis depending on the value of consideration paid for the property.
For property containing at least one, and not more than two, single family residences with a consideration value of:
Up to $55,000 X 0.5 % of total property value
From $55,000.01 to $250,000 X 1 % of total property value
From $250,000.01 to $400,000 X 1.5 % of total property value
From $400,000.01 to $2,000,000 X 2 % of total property value
Amounts exceeding $2,000,000 X 2.5 % of total property value
FOR EXAMPLE: A home with a consideration value of $1,150,000 (excluding HST):
Total MLTT= $19,475.00
This buyer would pay in total $38,950 in land transfer taxes if they purchased a home in Toronto and were not first time home buyers.
MLTT FAQs: http://www.toronto.ca/taxes/mltt_faq.htm
First-Time Purchaser Rebate
This rebate applies if you are a first-time purchaser of a newly constructed or re-sale residential property. For Ontario LTT rebates, it is a maximum of $4,000.
MLTT: The rebate for first-time home purchasers is up to a maximum of $4,475.00. If you are eligible for a rebate of all or a portion of the MLTT you owe, your lawyer will be able to claim the rebate electronically when he/she registers your transfer/deed.