Buying your first home comes with many associated costs. Besides appraisal fees, you will need to pay for the land your home sits on. When you purchase a home or land in Ontario, you are subjected to land transfer tax.
In Ontario, land is referred to as any existing buildings and homes, and those that are to be constructed. Land transfer tax is paid to the province of Ontario as a way for them to let you use their land. When you pay the land transfer tax, the land becomes yours (hence, it is being transferred to you). All provinces, with the exception of Alberta and Saskatchewan require the payment of land transfer tax.
Land transfer tax is based on the amount you pay for your land or the fair market value of the land (if a lease is being transferred or the land is being given to a shareholder from a corporation). To calculate land transfer tax on a property, there are factors that are taken into account such as:
When you buy your home, the land transfer tax is paid to the province of Ontario as soon as the transaction closes.
If you are a first-time homebuyer you could be eligible for a refund (or partial refund) for your land transfer tax. You can receive a maximum of $2,000 as a rebate on the Ontario land transfer tax you’re paying. Depending on the price of the home you are purchasing, the rebate could cover the entire amount of the LTT.
To be eligible for the first-time homebuyers LTT rebate you must be 18 years or older and live in the home within nine months of you purchasing it. If your home is a new construction, you must ensure that it qualifies for a home warranty. Furthermore, your spouse/partner cannot have owned a home while being your spouse/partner. However, if they owned a home prior to marrying you, that is acceptable. Finally, you cannot have owned a home anywhere else in the world to be eligible for the first-time homebuyers land transfer tax rebate. Make sure to apply for the refund within 18 months of buying your home otherwise you will not be able to receive the LTT rebate.
Buying a home in Toronto comes with its own set of land transfer taxes. An additional Toronto LTT will apply when your property closes to cover the municipal land transfer taxes.
For more information on Ontario land transfer tax and our mortgage products contact us today. At Northwood Mortgage™ our brokers and agents are the best in the industry. We’ll get you the interest rate and the ideal funding package to suit your homebuying needs.
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