No one ever wants to talk about taxes, but as your real estate lawyer, I have to bring up the subject. However, unlike some tax letters you'll get in your life, this one does contain some good news about a tax rebate!
As you may recall from discussions with my office, purchasers of property in Ontario are required to pay a provincial land transfer tax. First-time buyers, however, may qualify for a full or partial rebate on this tax, up to a maximum of $2,000. (If buying in the city of Toronto, home buyers are also subject to a municipal land transfer tax, but first-time buyers are completely exempt from this Toronto tax.) For a reminder of what constitutes a first-time home buyer, please click here.
When do you need to pay the land transfer tax?
Any outstanding tax that you do owe is paid by my office on your behalf on the closing date. Some time before that, you will be contacted by one of my staff and asked to provide a bank draft to my firm to cover this tax and other closing costs.
How the provincial land transfer tax is calculated
The Ontario Land Transfer Tax is calculated as a percentage of the purchase price of the property you are buying. (If you are the purchaser of a newly built home, the tax is based on the net price after deducting the HST, which is sometimes included by the builder in the purchase price.) The percentage of land transfer tax required increases on a sliding scale, increasing with the size of the purchase price:
For example, if the purchase price is $450,000, the tax is calculated as follows:
If you would like to calculate the tax on other prices, please click here for a Land Transfer Tax Calculator.
If you have questions about the land transfer tax or any other aspect of your purchase, please don't hesitate to contact my office by e-mail: firstname.lastname@example.org or phone: 519-824-7100.
As always, we're here to help!
Mark F. Graham
Mark F. Graham
Barrister, Solicitor, Public Notary
Mark Graham Law Office Professional Corporation