Land transfer tax calculator

The provincial government imposes the Land Transfer Tax (LTT), paid by anybody who purchases land in Ontario. It applies to land swaps between spouses and family unless an exemption is applicable. There are three primary exclusions from the LTT that apply to transactions that take place inside families. These exemptions include transfers between spouses, gifts, and transfers to family businesses.

Looking to figure out how much property transfer tax you owe in Canada?

To ensure you can pay the closing fees associated with purchasing your home, you must check that you have set aside adequate cash in a savings account. Transferring property ownership from the seller to the buyer is accompanied by a few significant charges collectively referred to as closing costs, prepared to avoid unpleasant surprises. Using our Land Transfer Calculator will make it much simpler for you to arrange these significant closing expenses. But before going to the calculator, let’s get an in-depth analysis of land transfer tax.

Does Mississauga have a land transfer tax?

Yes, Mississauga implemented land transfer tax too. To understand Mississauga property tax, let’s suppose the purchase of a home in Toronto costs C$600,000 and is required to pay a property transfer tax of C$16,200, of which the City of Toronto receives C$7,725. A real estate bubble has been inadvertently produced in Toronto's suburbs, most notably in Mississauga and other parts of the Greater Toronto Area, because of Toronto's high land transfer tax. Many people acquire more expensive houses in Mississauga since it is the suburb most immediately near Toronto.

Does the seller pay a land transfer tax in Ontario?

According to Canadian law, the person responsible for paying the LLT is the buyer, not the seller. It is not always good news, particularly for first-time buyers who may not be familiar with this sort of tax and may not have accounted for it in their budget since they were unaware of it. Buyers in cities with a large population and a high demand for housing, such as Toronto, will be required to pay a municipal land transfer tax.

How is the land transfer tax calculated in Ontario?

Several factors determine the property valuation for the land transfer tax, the most important of which are the acquisition price, liabilities, soft costs, and upgrades. Consider the property’s current value to prevent fraud if a lease has a term longer than fifty years or when transferring shares between enterprises. The tax rate, which ranges from 0.5 percent to 2.5 percent, is established by the value of the land.

• Above C$55,000 and up to a maximum of 0.5 percent
• Exceeding C$55,000 up to and including $250,000: 1% of total sales revenue
• Expenses over C$250,000 up to and including $400,000: 1.5% of total cost.
• Charges for amounts beyondC $400,000 are 2%.
• Add 2.5% to more than C$2,000,000 for properties with two or fewer separate houses.

How much is the land transfer tax in Mississauga, Ontario?

The estimated land transfer taxes (LTT) vary among provinces, and depend upon the purchase price of the property as well as its location. Many municipalities also levy an additional municipal land transfer tax. You may determine the appropriate tariff by going to the government of your state, province, or municipality website.
Allocate between 1% and 2% of the total worth of your property as a tax in your budget. Also, keep in mind that the tax rates will go up simultaneously with the increase in the purchase price. The higher the value of your property, the higher the rate, so the higher the tax. Following are the amounts and land transfer tax Ontario percentages:

• Up to C$55,000: 0.5%.
• C$55,001-C$250,000: 1%
• C$250,001-400,000: 1.5%
• C$400,001-C$2,000,000: 2%
• C$2,000,000: 2.5%

Ontario Land Transfer Tax Rates

First-time homeowners in Ontario are eligible for a tax credit worth up to C$4000, and may use it towards the province's land transfer tax. According to the Ontario land transfer tax calculator’s rates, this return will cover the total amount of tax for properties with a value of up to C$368,000. When acquiring a home for more than C$368k, the buyer is eligible for the total LTT return of C$4,000 and is responsible for paying any leftover LTT obligation.

Following table shows an example:

How do I avoid land transfer tax in Ontario?

Any time you buy land in Canada, you'll need to pay a land transfer tax. But as was previously indicated, first-time homebuyers who qualify may receive a full or partial tax refund based on the property province, municipality, and price.

Property transfer taxes may be waived in certain other cases, depending on the province's regulations and eligibility conditions. Among these are:

• Purchasing a brand-new home on the market.
• Real estate transfer to a direct heir (i.e., parent to child).
• Property distribution between spouses.
• Transfer of one person's property to another family business.
• Relatives selling up their farms.

Again, each province and municipality has its own policies regarding exemptions, so it's best to check with your government for details and maybe even talk to an expert like an accountant or tax specialist.

What percentage is land transfer tax in Ontario?

• Up to C$55,000: 0.5%
• C$55,001-C$250,000: 1%
• C$250,001-400,000: 1.5%
• C$400,001-C$2,000,000: 2%
• C$2,000,000: 2.5%

Does a first-time home buyer pay a land transfer tax in Ontario?

First-time buyers in Ontario can receive a credit on the Ontario property transfer tax of up to C$4,000 if they purchase in the province. Purchasers in Toronto may also be entitled for a refund of up to C$4,475 of the percentage of the sales tax that represents the city's responsibility. In either case, the prospective buyer must be able to demonstrate that they meet the following criteria to be eligible for a rebate:

• They must be a citizen or permanent resident of Canada.
• They must be at least 18 years old.
• They must intend to reside in the property within the next nine months.
• They must not have previously owned a home.

Incentives assist first-time purchasers to feel less of an impact from the taxes, even if they are rarely adequate to offset the taxes.

Is there a land transfer tax between family members in Ontario?

There is no tax on land transfers between members of the same family. In Ontario, if you transfer property to a spouse during separation proceedings and meet one of the following requirements, you are exempted from paying Land Transfer Tax:

• A court order mandates the transfer.
• Both parties have consented in writing to the transfer.
• The land is given without compensation, apart from an encumbrance (your spouse cannot pay you for the property but can assume the mortgage).
• Certain towns will exclude the buyer from paying the Land Transfer Tax if transferred to a lineal descendant, such as a parent, mother, brother, or sister.

Conclusion

In summary, the Land Transfer Tax will likely be due at closing, just as it is for most homebuyers. Your lawyer will include it in the closing fees, so you don't have to worry about it. Hence, remember that the Land Transfer Tax is distinct from, say, the sales tax on a brand-new structure. Both taxes are due upon the purchase of a brand-new home.

If not, you should expect a bill in the mail within the first month after the deal closes. Pay Land Transfer Tax bills entirely and not through instalments. As a result, remember to budget for this extra cost while looking at potential homes.