Toronto’s Land Transfer Tax: Is It Time for a Change?

Buying a home in Toronto is already a significant financial commitment, but one additional expense is raising questions about housing affordability: Toronto’s land transfer tax.

Toronto land transfer tax is becoming a major talking point as homebuyers face rising closing costs and renewed debate over housing affordability. With combined provincial and municipal land transfer taxes adding approximately $55,000 to the purchase of an average detached home, many are questioning whether Toronto’s current tax structure needs to change.

With the combined provincial and municipal land transfer taxes adding approximately $55,470 to the purchase of an average-priced detached home, the debate over whether this tax should be reduced has become a major issue in Toronto’s 2026 mayoral election.

But what does this mean for buyers, sellers, and the future of Toronto’s real estate market?

Understanding Toronto’s Land Transfer Tax

Unlike buyers in most other Ontario municipalities, Toronto homebuyers must pay two separate land transfer taxes: one to the Province of Ontario and another to the City of Toronto.

Introduced in 2008, Toronto’s Municipal Land Transfer Tax (MLTT) was designed to generate revenue for the city. However, as home prices have increased, so has the financial burden on purchasers.

According to a recent Financial Post article by Garry Marr, purchasing a detached home at approximately $1.56 million results in a combined land transfer tax bill of roughly $55,470.

That’s more than $55,000 in closing costs before considering legal fees, moving expenses, or renovations.

For buyers already stretching their budgets, this additional expense can significantly affect affordability.

Could Toronto’s Land Transfer Tax Be Reduced?

Toronto’s municipal land transfer tax has become a central topic in the 2026 mayoral election.

Mayoral candidate Brad Bradford has proposed eliminating the municipal portion of the land transfer tax on the first $1.1 million of a qualifying primary residence purchase.

Under this proposal, eligible buyers purchasing a $1.1 million home could save approximately $18,475 in municipal land transfer taxes.

Meanwhile, Mayor Olivia Chow supported increases to the municipal land transfer tax on properties valued above $3 million. Those higher rates took effect in April 2026.

The debate highlights two competing priorities: reducing upfront housing costs for buyers while maintaining municipal revenue to support city services.

Is the Land Transfer Tax Discouraging Homeowners From Moving?

One of the biggest concerns surrounding Toronto’s land transfer tax is its potential impact on housing activity.

For homeowners considering upsizing, downsizing, or relocating, the additional tax can make moving considerably more expensive.

A growing family might choose to renovate rather than purchase a larger home. Empty nesters may delay downsizing because of the transaction costs involved.

When fewer homeowners move, fewer properties may become available to buyers searching for homes that better suit their needs.

Research from the C.D. Howe Institute has raised concerns about the economic effects of land transfer taxes, including their potential to discourage residential transactions.

Reducing these costs could encourage greater mobility within the housing market, although the overall impact would depend on broader economic conditions.

What Does This Mean for Toronto Buyers and Sellers?

For buyers, land transfer taxes are an important part of calculating the true cost of homeownership.

Even when purchasing at a favourable price, buyers must account for closing costs beyond their down payment.

For sellers, high transaction costs can influence purchasing decisions, potentially affecting the number of qualified buyers actively searching for a property.

And for homeowners considering a move, understanding the costs of selling and buying in the same market is essential before making a decision.

While potential tax reductions could provide relief, proposed policy changes are not guaranteed. Buyers should plan using the rules currently in effect.

You can review Toronto’s current rates through the City of Toronto’s official Municipal Land Transfer Tax information.

The Bigger Picture: Toronto Housing Affordability

Toronto’s housing market faces challenges extending well beyond land transfer taxes.

Mortgage rates, housing supply, household incomes, and economic uncertainty all influence affordability.

Reducing transaction costs may help some buyers enter the market or encourage existing homeowners to move, but it is unlikely to solve Toronto’s broader housing challenges on its own.

The important question is whether the current tax structure strikes the right balance between generating municipal revenue and supporting a healthy, accessible real estate market.

Thinking About Buying or Selling in Toronto?

Whether you’re purchasing your first home, upgrading to a larger property, downsizing, or considering selling an investment property, understanding your true costs is essential.

Every real estate decision should begin with a clear picture of the numbers, current market conditions, and your long-term goals.

Thinking about your next move? Let’s sit down, review your options, and build a strategy that makes financial sense for you.

David Cinelli | Royal LePage Signature Realty

Source: Financial Post – Garry Marr: Why Toronto’s Land Transfer Tax Makes Less Sense Than Ever, October 14, 2026.