As a home buyer, you will be liable for paying the municipal tax known as the Toronto land transfer tax when you acquire your house. Land transfer tax, which is based on your property purchase price and is calculated using various marginal transfer tax brackets, can be a major expense for house buyers.
You will also be required to pay a provincial Ontario land transfer tax in addition to the Toronto land transfer tax. You will be eligible for a discount in your land transfer tax bill as a first-time home buyer for both your Toronto transfer tax and your Ontario transfer tax. You can calculate your potential rebates and the amount of land transfer taxes you will have to pay using the calculator below.
How Much are Land Transfer Taxes in Toronto?
Based on the cost of your home, a marginal tax rate mechanism is used to determine your Toronto land transfer tax. You will pay more in land transfer taxes if your purchase price is higher.
Land transfer taxes start at 0.5% of the first $55,000 of the purchase price and gradually rise all the way to 2.5% of the purchase price over $2,000,000. Your total transfer taxes—provincial and municipal—will be twice as much as the taxes in Toronto at the same Ontario transfer tax rates.
When was Toronto’s Municipal Land Transfer Tax introduced?
The Toronto Land Transfer Tax was first implemented in February 2008 after being approved by the Toronto City Council in 2006 through the City of Toronto Act. Homebuyers in Toronto were still required to pay the provincial land transfer tax, which was implemented in Ontario in 1974, before Toronto had a municipal land transfer tax.
Toronto implemented the municipal land transfer tax in order to increase revenue for the city’s budget. Since the tax was implemented in 2008, property prices have increased by almost 200%. As a result, the city of Toronto’s revenue from this tax has similarly skyrocketed. Due to the transfer tax making up about 5% of total city revenue, this has allowed the city to support more municipal initiatives and programs.
Will you need to pay Toronto Land Transfer Tax if you are buying a condo?
Yes, land transfer taxes from both Toronto and Ontario will still apply to condos. The municipality will still base your land transfer tax on the cost of your unit even though the land it is constructed on is shared with other condo owners in your building.
You will probably pay less land transfer tax when buying a condo because they are more affordable than the typical property in Toronto. You would owe $9964 in Toronto land transfer tax for an average condo price of $674,490, and you would owe $19,929 in total land transfer tax, including Ontario’s tax.
When is Toronto Land Transfer Tax to be paid?
Toronto’s land transfer tax must be paid when the deal is complete and you take ownership of the property, just like the land transfer tax in Ontario. It’s likely that your attorney, who is representing you, will pay this on the day of your closing. The closing date typically occurs 60 to 90 days after your purchase and sale agreement offer is accepted in a typical real estate transaction.
When are Land Transfer Taxes due on Toronto pre-construction condos?
Similar to a typical home purchase, the land transfer tax for those buying a pre-construction condo in Toronto is charged on the closing day. The primary distinction is that your closing date falls after the city has completed its inspection and the building has been registered. This time will often be given to your attorney, who will let you know.
How can you pay Toronto’s Land Transfer Tax?
You must have a lawyer represent you in Ontario when buying and mortgaging a property, so you won’t have to worry about how to pay the city of Toronto. Finding a competent attorney to represent you is extremely crucial for your land transfer tax bill.
The most typical way your attorney will cover this expense for you is by making arrangements with the city so that the money is paid on the day that you close on your new home.
What are the Toronto boundaries for where municipal transfer tax is owed?
City boundaries are significant because the GTA’s only location with this municipal land transfer tax is the city of Toronto. The areas south of Steeles Avenue, east of Etobicoke, including the areas east of Eglinton Avenue, Etobicoke Creek, and Highway 427, west of the Pickering and Scarborough town boundary, and north of Lake Ontario are considered to be part of Toronto. As a result, the following areas are part of the city of Toronto:
- Toronto and East York to the south
- Etobicoke York to the west
- North York to the north, and
- Scarborough to the east