Land transfer taxes are one of the closing costs you must budget for when purchasing a property. They are provincial or municipal taxes that must be paid in full prior to closing on a property.
Anyone who purchases a property in Canada must pay a land transfer tax to the province you have purchased in, with the exception of Alberta and Saskatchewan. In certain parts of Canada, such as Toronto, you must pay both a provincial and a municipal land transfer tax.
How much can you expect to pay in land transfer taxes?
Ontario, Quebec, British Columbia, Manitoba, Nova Scotia, New Brunswick, and Prince Edward Island charge a property transfer tax that is calculated based on the amount you have paid for the property.
The other provinces and territories do not technically have a land transfer tax, but they do charge registration fees based on the value of the property being purchased. These fees are typically much lower than a traditional land transfer tax amount but are still due at the time of closing.
Even within the provinces that charge a land transfer tax, each individual province sets their own tax rate so the exact amount you owe will vary. For example, in Nova Scotia, each municipality within the province sets their own tax rate, so the location you’ve purchased a property in will dictate what your land transfer tax will be.
In Ontario, the tax rates on land transfers are as follows:
– 0.5% on amounts up to and including $55,000
– 1.0% on amounts greater than $55,000, up to and including $250,000
– 1.5% on amounts greater than $250,000, up to and including $400,000
– 2.0% on amounts greater than $400,000
– 2.5% on amounts greater than $2 million, where the land contains one or two single-family residences
Land transfer tax rebates for first-time homebuyers
First-time homebuyers in Ontario, British Columbia, and Prince Edward Island are eligible for rebates of all or part of their land transfer tax. To be eligible for a land transfer tax refund:
– You must be at least 18 years of age
– Have not owned a home or an interest in a home anywhere in the world
– Your spouse has not owned a home or interest in a home anywhere in the world while he or she was your spouse.
As each province has their own set of rules and regulations surrounding land transfer tax and first-time homebuyer rebates, it’s important to talk with your lawyer, realtor, or mortgage broker about the closing costs that you will be expected to pay after you’ve purchased a property.
If you aren’t sure if you qualify for a land transfer rebate, or you’d like to know how much you could expect to pay in land transfer fees, please reach out. Here at Gail Sylvester Mortgages, we’re always here to help… with more than just mortgages.