Land Transfer Tax in Canada: What You Should Know

Oct 10, 20244 min read

What is Land Transfer Tax?

Land Transfer Tax (LTT) is a provincial tax levied on purchasing real estate in Canada. It's essentially a fee paid to the government when a real estate transaction is completed and the title changes names. The amount of LTT varies from province to province, and there can be regional differences even within provinces.

When Do You Pay Land Transfer Tax?

Land Transfer Tax is typically paid at the time of property transfer, which usually coincides with the closing date of your real estate transaction. This is when the property ownership officially transfers from the seller to the buyer.

Your lawyer will calculate your land transfer taxes and remit them to the government.

Other Scenarios Triggering Land Transfer Tax

While the most common scenario for triggering Land Transfer Tax is the purchase of a property, other situations can also result in the payment of this tax. These include:

Transfer of Ownership: If a property is transferred between family members or other individuals, Land Transfer Tax may be applicable.
Rezoning: If a property is rezoned to allow for a different use, Land Transfer Tax may be triggered.
Creating a New Property: If a property is subdivided or a new property is created from existing land, Land Transfer Tax may be applicable.
Mortgaging a Property: In some cases, mortgaging a property can trigger Land Transfer Tax, especially if a new owner takes out the mortgage.

It's important to consult with a lawyer or tax advisor to determine if these scenarios apply to your situation and understand the potential tax implications.

How Much Does Land Transfer Tax Cost?

The exact amount of Land Transfer Tax you'll need to pay depends on several factors:

Province and Region: As mentioned, LTT rates vary across Canada. Some provinces have higher taxes than others.
Property Value: The more expensive the property, the higher the LTT.
Property Type: The type of property (e.g., residential or commercial) can also influence the tax amount.
Exemptions and Rebates: Some provinces offer exemptions or rebates for certain buyers, such as first-time homebuyers or individuals purchasing a principal residence.

Land Transfer Tax Example For Ontario

To give you a general idea, let's consider the current Land Transfer Tax (LTT) rates in Ontario:

$0 to $55,000: 0.5%
$55,001 to $250,000: $275 plus 1.5% of the amount over $55,000
$250,001 to $400,000: $3,725 plus 2.5% of the amount over $250,000
$400,001 to $500,000: $6,225 plus 3.5% of the amount over $400,000
$500,000 and over: $7,725 plus 4.5% of the amount over $500,000

Be sure to consult with a real estate professional or tax advisor to get an accurate calculation for your specific situation. They can provide you with detailed information about LTT rates in your province and any applicable exemptions or rebates.

Other Land Transfer Tax Scenarios

Multiple Properties: If you're purchasing more than one property at the same time, the LTT may be calculated differently.
Land Transfer Tax Surcharge: Some provinces, like Ontario, have introduced a Land Transfer Tax Surcharge on properties over a certain value. This additional fee can significantly increase the overall cost.

For more information and to calculate your specific Land Transfer Tax, a good resource we've found is from RateHub's website. Link below:

https://www.ratehub.ca/land-transfer-tax-ontario

Land Transfer Tax Exemptions and Rebates

Many provinces offer exemptions or rebates to reduce the amount of Land Transfer Tax that buyers need to pay. Some common exemptions and rebates include:

First-Time Homebuyers: Many provinces offer exemptions or rebates for first-time homebuyers purchasing a principal residence. The specific eligibility criteria and amount of the exemption or rebate can vary by province. In Ontario, this can be up to $4,000 for first time home buyers.
Family Transfers: Some provinces have exemptions for transfers of property between family members, such as parents and children.

Check the official government website below to see if you qualify for an exemption or rebate.

Additional Resources

Ontario Government: https://www.ontario.ca/document/land-transfer-tax/calculating-land-transfer-tax
Local Real Estate Associations: Your local real estate association can provide information and resources related to Land Transfer Tax in your area.

TL;DR:

Land Transfer Tax (LTT) is a provincial tax paid when buying real estate in Canada.
LTT amounts vary by province and property value.
Exemptions and rebates may be available for first-time homebuyers and family transfers.
For accurate information, consult government websites, your lawyer or a tax advisor.