Today’s Real Estate Education dives into the land transfer tax in Ontario.
On the closing of a sale of a home, taxes inevitably need to be paid when the title changes from the seller to the buyer.
In Ontario, there are two different types of land transfer taxes: provincial and municipal. Each tax amount ranges between 0.5% to 4%. The amount of tax owed is based on the selling price of the home.
Toronto, however, is the only current area in Ontario that has both municipal and provincial land transfer tax.
To show the differences in land transfer taxes, look at this example of buying a $500,000 home in Ontario:
Although none of us really want to pay taxes, there is some good news for first time home buyers.
First time home buyers will reduce their land transfer tax of principal residences by up to $4,000 in Ontario, and up to an additional $4,475 if their purchase is in Toronto.
If you are buying a home in Ontario, you should know how much land transfer tax you owe on closing, as this amount cannot be added to your mortgage amount. This amount can be calculated using an Ontario land transfer calculator found by running a quick Google search.