Urs Villiger
real Estate sales representative
Land Transfer Tax Calculation
The following Land Transfer Tax is imposed by the Province of Ontario. If you are planning to buy a home in the city of Toronto you will incur an additional Toronto Land Transfer Tax (see information further below).
Ontario Provincial Land Transfer Tax
0.5% of the first $55,000
+ 1.0% of the amount from $55,000 to $250,000
+ 1.5% of the amount in excess of $250,000
+ .5% surcharge on the amount in excess of $400,000
A simple formula is:
AmountCalculation of LTT
0 to 55,000.005 x Amount
55,000 to 250,000(.01 x Amount) -275
250,000 to 400,000(.015 x Amount) - 1525
400,000 and up(.02 x Amount) -3525
Examples in numbers
Property of $170,000.00 - $1,425.00 in Ontario LTT
Property of $320,000.00 - $3,275.00 in Ontario LTT
Property of $400,000.00 - $4,475.00 in Ontario LTT
Property of $500,000.00 - $6,475.00 in Ontario LTT
Property of $1,000,000.00 - $16,475.00 in Ontario LTT
Details of Approved Toronto Land Transfer Tax
October 23, 2007 -- Toronto City Council has approved a municipal land transfer tax that will be levied on top of the provincial land transfer tax. TREB worked very hard to oppose this tax and commends the efforts of REALTORS® on this issue. TREB took a strong position to oppose this tax as unfair in principle and refused to compromise. As a direct result of this strong position, City Council was forced to make a number of amendments to the City’s original proposal, including rebates for first-time buyers, a reduced rate, and grandfathering for existing transactions.
What was approved by City Council?
A second land transfer tax, on top of the provincial land transfer tax, at the following rates:
Residential:
•0.5% of the amount of the purchase price up to and including $55,000, plus
•1% of the amount of the purchase price between $55,000 and $400,000, plus
•2% of the amount of the purchase price above $400,000
When does this take effect?
February 1, 2008.
Where does this apply?
The Toronto land transfer tax only applies to transactions within the City of Toronto. This does NOT apply to property transactions outside of the City of Toronto.
Are first time home buyers affected?
First time home buyers of new AND re-sale homes will receive a rebate of the Toronto land transfer tax of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000). Teranet will be collecting the Toronto land transfer tax for the City of Toronto. Once the City’s rebate policies are reflected in Teranet’s collection system, the rebate-eligible amount will be exempt at the time of registration. The City previously indicated that these arrangements would not be made until the “spring of 2008”, but has now indicated that changes will be made by February 1, 2008, when the Toronto land transfer tax takes effect. According to the City, purchasers who are eligible for a FULL rebate of the Toronto land transfer tax will not have to pay the tax (meaning that they do not have to pay the tax upfront and be rebated later). This means that first-time home buyers where the total Toronto land transfer tax is $3,725 (the Toronto land transfer tax payable on a home purchased for $400,000) or less, will not pay Toronto land transfer tax (see exception noted below). If your clients have concerns, they should check with their lawyer.
Note: First-time home buyers with Toronto land transfer tax payable above the maximum rebate amount of $3,725 (those purchasing homes above $400,000) will be required to pay the total Toronto land transfer tax, and then receive the maximum rebate of $3,725 at a later date from the City. Once all changes have been made to Teranet’s collection system, in the spring of 2008, these buyers will only have to pay the balance of the Toronto land transfer tax above $3,725.
Who qualifies as a first-time home buyer?
According to the City of Toronto, eligibility rules for the Toronto Land Transfer Tax first-time buyer rebate will mirror provincial rules, as follows:
•The purchaser must be at least 18 years of age.
•The purchaser must occupy the home as his or her principal residence no later than nine months after the date of the conveyance or disposition.
•The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
•If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world while he or she was the purchaser’s spouse. If this is the case, NO refund is available to either spouse. Note: If a purchaser’s spouse owned an interest in a home BEFORE becoming the purchaser’s spouse, but not while the purchaser’s spouse, the purchaser may be eligible for some rebate.
