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Land Transfer Tax

As a rule, when land is transferred from one owner to another, the Province charges a tax under the Land Transfer Tax Act. Recently, the City of Toronto decided to charge a similar transfer tax for land within the City. The tax is payable when the deed is registered in the appropriate Land Registry Office.PROVINCIAL RATES
The total tax payable is based upon the value of consideration, which is usually the total purchase price paid for the land. The rate of tax steps up as the value of consideration increases. The specific rates are:

0.5% of the value of the consideration for the transfer up to and including $55,000;
1.0% of the value of the consideration that exceeds $55,000 up to and including $250,000;
1.5% of the value of the consideration that exceeds $250,000;
2.0% of the amount by which the value of the consideration exceeds $400,000 for land that contains at least one and not more than two single-family residences

By way of example, if the purchase price of a single family home is $500,000, the tax would be calculated as follows:
on the first $55,000 = 275.00
on the next $195,000 = 1,950.00
on the next $150,000 = 2,250.00
on the last 100,000 = 2,000.00
Total 6,475.00

CITY OF TORONTO RATES
For property within the City, the tax rates depend on whether the property contains at least one and not more than two single-family residences. For these single-family residences, the rates are as follows:
0.5% of the value of the consideration for the transfer up to and including $55,000;
1.0% of the value of the consideration that exceeds $55,000 up to and including $400,000;
2.0% of the amount by which the value of the consideration exceeds $400,000

By way of example, if the purchase price of a single-family home is $500,000, the tax would be calculated as follows:
on the first $55,000 = 275.00
on the next $345,000 = 3,450.00
on the last $100,000 = 2,000.00
Total 5,725.00

For properties other than single-family residences, the rates are:
0.5% of the value of the consideration for the transfer up to and including $55,000;
1.0% of the value of the consideration that exceeds $55,000 up to and including $400,000;
1.5% of the amount by which the value of the consideration exceeds $400,000 up to and including $40,000,000;
1.0% of the amount by which the value of the consideration exceeds $40,000,000.

REFUNDS
First-time homebuyers may be entitled to a refund of Provincial land transfer tax, up to a maximum of $2,000.00. Usually, this refund is claimed at the time of registration. If not, the refund may be claimed directly from the Ministry of Revenue (provided that it is claimed within 18 months of registration). There are certain requirements to qualifying for the first-time-homebuyer refund:
–must be at least 18 years old;
–must occupy the home as your principal residence within 9 months after the date of transfer; and
–cannot have previously owned a home, or an interest in a home, anywhere in the world

Also, your spouse cannot have owned a home, or an interest in a home, anywhere in the world while being your spouse.

If not claimed at the time of registration, refunds must be requested within 18 months of registration.

For more information, please see Ontario Tax Bulletin at:

Ontario Tax Bulletin

The City of Toronto also offers refunds to first-time home buyers, up to a maximum of $3,725.00.

For information on their tax programme, see:
Tax Programme

EXEMPTIONS FROM THE TAX
Exemptions from land transfer tax are limited. The main exemptions include:
–certain transfers from an individual to their family business corporation
–certain transfers of farmed land between family members
–certain transfers between spouses
–certain transfers between a trustee and a beneficial owner
–certain transfers of a life lease from a non-profit organization or a charity

A deferral of land transfer tax may be available when land is transferred between affiliated corporations, and notice of the transfer is not registered in a land registry office.