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What are Land Transfer Taxes? Should I Be Paying them?

Image showing how home costs are affected by tax

August 9, 2019

When you acquire property or land, you pay land transfer tax to the province when the transaction closes. Land transfer taxes are taxes that are imposed by the Government of Ontario and municipal governments. The percentages range from 0.5 to 4.0 of the total amounts of the property and are paid only by the person or persons buying the house. 

 

Should I Be Paying Them?

 

These taxes are only paid when you are buying a house, not selling it. Many provinces have different percentages, but they all range from 0.5% to 3% (approx.). It is mandatory that you pay them when you buy your new home.

 

LTT in Other Provinces

 

  • British Columbia – 1%-3 %
  • Alberta – There is no LTT
  • Saskatchewan – There is no LTT
  • Manitoba – 0.5%-2%
  • Quebec – 0.5%-1.5%
  • Newfoundland/Labrador – 0.4%-0.5%
  • Nova Scotia – 0.5%- 1.5%
  • P.E.I – 1%
  • New Brunswick -1%
  • Yukon -1%-3%
  • Northwest Territories -$$1.50 for every $1,000 or part thereof (minimum charge of $100).
  • Nunavut – There is no LTT

 

 

Rebates for First Time Buyers

 

If you are buying your first house, depending on your province, you may be entitled to a rebate. In Ontario, the maximum rebate you are eligible for is $4,000. If you are a first-time buyer, but your spouse isn’t, you will be able to get a rebate based on the percentage of the house that you own. If you are a single parent purchasing your first home, you may be entitled to the first-time buyer’s rebate.

 

Prerequisites for a Rebate 

    

  • The purchaser must be at least 18 years old.
  • The purchaser must occupy the home as their principal residence within nine months of the date of transfer.
  • The purchaser cannot have ever owned an eligible home, or an interest in a qualified residence, anywhere in the world, at any time.
  • If the purchaser entered into an agreement of purchase and sale before December 14, 2007, the home must be a newly constructed home, and the purchaser must be eligible for the Tarion New Home Warranty.
  • If the purchaser has a spouse, the spouse cannot have owned an eligible home, or had any ownership interest in an eligible home, anywhere in the world, while he or she was the purchaser’s spouse. If this is the case, no refund is available to either spouse.

 

What if I am a Seller?

 

If you are the seller of the house, any kind of Land Transfer Taxes does not apply to you. These taxes are only applicable to the new owners of the house.

 

Land transfer taxes provide the province of Ontario enough funds which can then be used to improve roadways, infrastructure, public transit, employment opportunities and affordable housing. If you need further help understanding the ins and outs of land transfer tax and how it applies to you, contact Mortgage Forces today for more information!

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