Posted onApril 10/2017
When it comes to buying property, land transfer tax is another element to consider. Land transfer tax must be paid to the province once the sale is closed. Once you’ve bought land, or a beneficial interest in land, then you are responsible for the payment of the land transfer tax. Land transfer tax applies to all types of property/land, whether residential or commercial.
Depending on which city you’re buying property in, land transfer tax may also have to be paid separately to the municipality. In Toronto, buyers also have to pay Toronto land transfer tax, in addition to paying tax to the province.
It’s worth noting that land transfer tax must be paid on the closing date, which may not be the same as the occupancy date. In many condo buildings that are still under construction, you may have to pay a builder rent during your interim occupancy period. Your possession date and the closing date will then be different, and land transfer tax will not have to be paid until the closing date.
Land transfer tax is determined by the fair market value of the land and the type of the property, as well as any remaining mortgage or any debt accumulated during the transfer. In Ontario, first-time home buyers are eligible for a discount or refund of land transfer tax. To qualify, you and/or your partner/spouse must have never before owned property anywhere in the world.
You lawyer can arrange for the land transfer tax payment to go through on the closing date of your property. This amount must be paid, in full, to the provincial government.
If you are concerned or curious about what the land transfer tax on a specific property will be, we provide a land transfer tax calculator right here on our website. To use this calculator, you will just need the purchase price of the property. Please note, this calculator only calculates land transfer tax rates for Ontario properties. Further information on land transfer tax rates can be found on the Ontario Ministry of Finance website.
When buying property, it’s important to calculate and budget for land transfer tax. With so many associated costs with purchasing a home or other type of property, it is helpful to seek the advice of a real estate professional, legal advice, and help from a mortgage expert in order to avoid any surprise costs!