Land Transfer Tax Refund

In Ontario, purchasers of new and resale residential homes must pay a tax at the time of the closing of the purchase known as the Land Transfer Tax.The tax is calculated upon a sliding scale that increases with the purchase price of the house (excluding any GST).

The rate of tax is as follows:

  • 0.5% – $55,000
  • 1.0% – of next $195,000
  • 1,5% – of next $150,000
  • 2.0% of remainder

The Ontario government offers a refund of this tax for qualified buyers up to a certain amount. The refund applies to first time buyers of new and resale homes. The maximum rebate is $2,000, which is the tax applicable to the purchase of a $227,500 home excluding GST.

If the purchase price of the home exceeds $227,500 plus GST, then the purchaser only receives a partial refund and must pay the balance of the tax.

Consult with your lawyer about the mechanism for applying for and receiving the refund.

As of February 2008, in addition, purchasers of new and resale homes in Toronto must also pay a City imposed municipal land transfer tax.

The City of Toronto Tax rates are as follows:

  • 0.5% – $55,000
  • 1.0% – of next $345,000
  • 2.0% – of any amount exceeding $400,000

For first time purchasers, a rebate of up to $3,725 will apply.