Ontario's Land Transfer Tax is a provincial tax payable by the buyer when a change is made to the registered title/ownership of the property. Therefore, if you purchase a property or land you are responsible for paying Land Transfer Tax to the province at the time the transaction closes.
WHAT TRANSACTIONS QUALIFY?
1.the purchase of all property whether it be residential or commercial;
2.the transfer of title/ownership of the property into another persons name (ie: title is in both parents names and they want to transfer ownership to their only child - the child is responsible for paying Land Transfer Tax.
REFUNDS AND EXCEPTIONS TO LAND TRANSFER TAX
1.the transfer of title/ownership of the property into your spouse's name by way of love and affection - this only applies if you are transferring between spouses; and
2.the transfer of title/ownership of the property from Trustee to Beneficiary.
WHO IS RESPONSIBLE FOR PAYING THE TAX?
Every person/entity obtaining an interest in land or property must pay land transfer tax. The buyer is responsible for paying Land Transfer Tax NOT the seller.
WHEN IS LAND TRANSFER TAX PAYABLE?
Land Transfer Tax is payable at the time the buyer is registered as the new owner in the Land Title Office on closing. First time homebuyers of newly built homes receive their refund immediately. First time homeburys of resale homes must apply to the government for their refund.
HOW IS THE TAX PAID?
The buyer's lawyer pays the Land Transfer Tax on behalf of the buyer on the closing date. The amount will be included in the closing funds provided to their lawyer.
HOW IS THE TAX CALCULATED?
The tax is calculated based on the purchase price as follows:
0.5% on the first $55,000 of the purchase price, plus
1.0% on the amount exceeding $ 55,000 up to and including $250,000, plus
1.5% on the amount exceeding $250,000 up to and including $400,000, plus
2.0% on the amount over $400,000.
NOTE: If you are buying new from the builder, the Land Transfer Tax is calculated on a price which is net of GST and therefore the Land Transfer Tax will be slightly less for a new home than for a resale home with the same price.
TORONTO LAND TRANSFER TAX
The city of Toronto has implemented its own Land transfer tax, so if you are buying property with the city limits, you will be required to pay an additional tax, calculated on the same scale, in effect doubling your tax payment.