What is Land Transfer Tax?
Simply put, this is the tax levied when homes change hands in Ontario. Since the seller is usually responsible for paying the real estate fee, the buyer customarily pays the tax to the government when a property is transferred into a new buyer’s name.
Land Transfer Tax applies to all land-related transactions in Ontario. Every time a property is sold, this tax needs to be paid by the buyer.
Importantly, Land Transfer Tax is more expensive in the City of Toronto than in surrounding municipalities. This could be an important consideration when deciding on where you would like to move to next. If you are considering the City of Toronto for your next home purchase, it might be a good idea to verify the amount of your land transfer tax in advance.
Click here to determine the amount of Land Transfer Tax on your upcoming purchase.
First Time Buyer’s Rebate
If you are a first-time homebuyer, you may be eligible to receive this rebate, either in part or in full.
To be eligible, you must:
- Be at least 18 years of age or older
- Not have owned a home or have interest in a home anywhere in the world
- If married, not have a spouse who has owned a home anywhere in the world while married to you
Prior ownership in a home or interest in a home means you won’t qualify for the refund, even if you received the first house as a gift or inheritance.
How Can You Apply?
According to the provincial government, qualifying taxpayers may claim an immediate refund at time of registration.
Speak with your real estate lawyer about the fact that you are a first-time homebuyer, and that you would like to ensure you receive the rebate. Provided you meet the initial eligibility requirements, your lawyer may even complete the paperwork on your behalf in preparation for closing.
Provided everything is in order, the amount owing on your Land Transfer Tax will be reduced by up to $4,000 on completion. This avoids the need for making the full tax payment on closing day and waiting for a rebate to arrive.
However, if the refund is not claimed at registration, the government recommends that the tax be paid on closing and a claim for the refund submitted to the Ministry of Finance. No interest is paid on this refund. Click here for more details on how to submit a claim after closing.
Do you have other questions about your closing costs? Click here for a detailed breakdown of what to expect.
Reference: Ontario.ca (2021). Land Transfer Tax Refunds for First-Time Homebuyers.
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