When you are purchasing a home or investment property you must factor in the cost of land transfer tax. In general, if you buy land or an interest in land in Ontario, you must pay Ontario’s land transfer tax, whether or not the transfer is registered at one of Ontario’s land registry offices.
Land includes any buildings, buildings to be constructed, and fixtures (such as light fixtures, built-in appliances and cabinetry). Land transfer tax is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.
Below is a helpful table that can help you determine what your land transfer tax will be on your purchase.
How much tax do I pay?
If you are a first-time homebuyer, you may be eligible for a refund of all or part of the tax.
The tax rate has not changed since June 1, 1989.
The tax you pay is as follows:
0.5% of the value of consideration for the transfer up to and including $55,000,
1% of the value of the consideration which exceeds $55,000 up to and including $250,000, and
1.5% of the value of the consideration which exceeds $250,000, and
2% of the amount by which the value of the consideration exceeds $400,000 for land that contains at least one and not more than two single family residences.
Generally speaking this tax is paid at the time the transfer is registered, or with the balance of the closing costs that are calculated by your lawyer on closing.