.png)
When buying a property in Ontario, one of the significant closing costs to plan for is the land transfer tax (LTT). It’s a tax paid by the buyer on the transfer of land or an interest in land from one person to another. Whether you’re purchasing a condo, a house, or even vacant land, LTT will be a part of your closing costs.
How is Land Transfer Tax Calculated?
Ontario’s LTT is calculated as a percentage of the purchase price, with rates that increase as the price of the property goes up. Here’s a quick breakdown of Ontario’s land transfer tax rates as of 2024:
• 0.5% on the first $55,000 of the property’s purchase price
• 1.0% on the portion from $55,000 to $250,000
• 1.5% on the portion from $250,000 to $400,000
• 2.0% on the portion from $400,000 to $2,000,000
• 2.5% on any amount above $2,000,000
For example, if you’re buying a property priced at $800,000, the LTT would be calculated across these brackets, totaling approximately $12,475.
Additional LTT in Toronto
If you’re buying property in Toronto, you’ll pay an additional municipal LTT, which mirrors the provincial tax. This means Toronto buyers face double LTT - one at the provincial level and one at the city level.
First-Time Home Buyer Rebates
Ontario offers rebates on the provincial LTT for first-time home buyers to help make home ownership more affordable. Eligible buyers can receive up to $4,000 back, effectively covering LTT on homes priced up to $368,000. Toronto also offers a rebate on its municipal LTT of up to $4,475 for first-time buyers.
Preparing for Land Transfer Tax
It is essential to budget for LTT in your closing costs to avoid surprises. Working with a real estate agent or lawyer can help clarify these costs, and using an online LTT calculator can give you a quick estimate based on your purchase price.
Land transfer tax can add a significant expense to your closing costs, especially in Toronto, but understanding it can help you better plan for your home purchase in Ontario.
Comments