Unless special exemption is given under an Act or regulation, tax has to be paid on any and all land transfers for registrations.
Potential buyers in the Greater Toronto Area should schedule the cost of tax payment on property transfer registration in their budget. The payment of these taxes is on the buyer. Depending on the area and jurisdiction, the cost of these taxes can be anywhere between 0.5% to 2% of the price of the property.
Land Transfer Tax rates in Ontario
In Ontario, the rates for land transfer taxes are determined by the date of the purchase/sale. Starting January 1, 2017, the rates are calculated as follows
- 0.5% for amounts up to and including $55,000
- 1 % for amounts exceeding $55,000 and up to $250,000
- 1.5% for amounts exceeding $250,000 but up to $400,000
- 2.0% for amounts in excess of $400,000
- 2.5% for amounts exceeding $2,000,000 (2 million) when the property has one or two single family residences.
Rebates on Land Transfer Taxes
A maximum of $4000 rebate is provided to first-time home buyers of an eligible property. This means that first-time home owners will not be paying land transfer taxes on the first $368,000 of the price of their houses.
Conditions for Eligibility for Rebate for the Buyer
The three main conditions that must be met to qualify for the rebate include the following
- Buyer must be at least 18 years of age
- Buyer must have purchased the home as his/her primary place of residence and move in within 9 months of closing the deal.
- Buyer must not have owned or had ownership interest in an eligible house anywhere around the world.
Conditions for Eligibility for Rebate for the property
Any property such as a fully detached house, a semi-detached house, row townhouse or a condo unit, duplex, triplex or fourplex, and a mobile home compliant with the Canadian Standards Association Standard CAN/CSA-Z240 is eligible that has been acquired for the purpose of living. In addition, if you acquire capital stock share(s) of a co-operative corporation with the intention of living in the corporation-owned unit will also qualify you for a rebate.
Are there any limits on the Claim Amounts?
Yes. The rebate amount will be less if one or more of the buyers is not a first-time buyer. This means that the actual rebate will be in direct proportion to the amount paid by the first-time buyer.
For spouses: If one spouse is buying a house for the first time but the other spouse has owned a house before getting married to the current spouse, then the first one is eligible for claiming the full rebate.
For non-spouses: Which ever partner is eligible will receive the rebate that is directly proportional to the amount of money he/she has contributed.
In addition, properties bought for the purpose of investment do not qualify for the rebate.
The application for rebate must be made within 18 months of the registration. Buyers can claim immediate refund at the time of registration. Any property be it commercial, industrial, piece of vacant land, or an apartment building that costs $400k or more will have tax rate increased from 1.5% to 2%. Anything that costs more than 2 million will have tax rate raised from 2% to 2.5%.