Here in Toronto, we’re #blessed when it comes to paying land transfer tax.
If you’re detecting a slight hint of sarcasm, it’s time to reward yourself a round of applause! Here in Toronto, we’re certainly very unlucky when it comes to paying land transfer tax.
Not only do we have to pay a Provincial Land Transfer Tax, but we also need to pay a Municipal Land Transfer Tax. This tax was first implemented in 2008 and has essentially been the bane of every real estate agent and homebuyer’s existence since.
So, what do need to know about this municipal land transfer tax? Keep reading to find out.
Short and sweet, anyone who purchases a home or a business in Toronto will be subject to this tax. The boundaries for this tax are Steeles to the North, Lake Ontario to the South, Etobicoke to the West and Scarborough to the East.
Remember, this tax is exclusively for buyers. So, if you’re thinking of selling your property, rest assured that this tax will not be applied to the sale of your home. But, when it comes time to buy a home after selling, this is when you’re going to be hit with the tax.
How Much is It?
So how much is this Municipal Land Transfer Tax, exactly?
When the time comes, you can easily calculate your tax on a land transfer tax calculator. However, we’ll provide the breakdown of the fees here:
- 0.5 % of to and including the first $55,000
- 1% of the value which exceeds $55,000 up to and including $250,000
- 1.5 % of the value between $250,000 and $400,000
- 2% of the value between $400,000 and $2,000,000
- 2.5 % of the value above $2,000,000
Confusing? You betcha.
Don’t fret – your lawyer and your real estate agent will be able to calculate the approximate costs for you. This way you can factor these costs into your overall budget before proceeding.
When Do I pay?
Unfortunately, this tax has to be paid upfront. This, in part, is what makes land transfer tax so daunting for prospective homeowners. It cannot be added to your mortgage or broken down into more affordable payments.
Instead, you’re responsible for paying your Municipal Land Transfer Tax on closing. This is the day that the deed transfers to your name and you take title of your new home. Of course, this also happens to be the day that you get your keys.
We get it!
Unfortunately, there’s no magical trick to avoid paying this municipal land transfer tax altogether.
If you plan to purchase property within the Toronto boundaries, you’re going to be responsible for paying this tax.
However, first-time homebuyers may be eligible for a refund of all or part of this tax. For this rebate, you must be 18 years of age and you cannot have owned any interest in any property around the world. The amount of your rebate depends on the purchase price of your home.
Is There Any Hope for the Future?
Sadly, it looks as though the Municipal Land Transfer Tax is here to stay. Not only does it largely contribute to the City’s operating revenue, but it also helps to fund integral parts of society such as social housing, public infrastructure and transit.
While it’s always possible Municipal Land Transfer Tax fees will be minimized in the future, don’t hold your breath. To think that the City would be willing to cut such significant revenue isn’t exactly promising.
Toronto Home Buyers: 0
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