When you buy land or an interest in land in Ontario, you pay Ontario’s land transfer tax. Land includes any buildings, buildings to be constructed, and fixtures (such as light fixtures, built-in appliances and cabinetry).
Who pays land transfer tax?
When you acquire a property or land, you pay land transfer tax to the province when the transaction closes.
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.
In some cases, land transfer tax is based on the fair market value of the land, for example, where:
- the transfer of a lease with a remaining term that can exceed 50 years
- the transfer of land is from a corporation to one of its shareholders, or
- the transfer of land is to a corporation, if shares of the corporation are issued.
If you are a first-time homebuyer, you may be eligible for a refund of all or part of the land transfer tax.
Other land taxes
Local municipalities charge a tax on the residential or business property you own. If you have questions about municipal property tax, contact your local municipality. If your property is located in an unorganized territory (an area without municipal organization) of Ontario, property tax is collected through the provincial land tax program administered by the Provincial Land Tax Office in Thunder Bay.
If you buy property in the City of Toronto, you may also pay the City of Toronto’s own municipal land transfer tax.
Harmonized sales tax
The harmonized sales tax (HST) applies to newly constructed homes or substantially renovated homes, but does not apply to resale homes. Buyers of new homes may receive a rebate of up to $24,000 of the provincial portion (8%) of the HST. If you have any questions about the HST rebate please contact the Canada Revenue Agency at 1 800 959-1953.
Land transfer tax rates
The tax rates calculated on the value of the consideration are:
- 0.5% up to and including $55,000
- 1% above $55,000 up to and including $250,000
- 1.5% above $250,000
- 2% above $400,000 where the land contains one or two single family residences.
The land transfer tax rate is the same for residents and non-residents of Canada.
Calculating the tax amount
Use the table below to calculate land transfer tax.
Vacant lot with a construction contract
Where a construction contract is entered into as part of the arrangement relating to the purchase of a vacant lot or lots, the value of the consideration is calculated on the:
- total cost of the lot, plus
- cost of construction contract,
Value of consideration in foreign currency
All monies must be expressed in Canadian dollars. The land transfer tax statements must set out the value of the consideration in Canadian dollars. The date of currency conversion should be the:
- date that the agreement of purchase and sale is accepted and becomes a binding contract, or
- date of registration if there is no written agreement.
Paying the tax
Ontario’s land transfer tax is payable when the transfer is registered.
If the transfer is not registered within 30 days of closing, you must submit a Return on the Acquisition of a Beneficial Interest in Land form to the Ministry of Finance, along with the payment of tax within 30 days after the closing date.
Some person(s) do not pay land transfer tax on certain transfers of land. The exemptions include:
- certain transfers between spouses
- certain transfers from an individual to his or her family business corporation
- certain transfers of farmed land between family members
- certain transfers of a life lease from a non-profit organization or a charity.
A deferral of land transfer tax may be available when land is transferred between affiliated corporations, and notice of the transfer is not registered on title.
General anti-avoidance rule (GAAR)
Bill 14 Building Opportunity and Securing Our Future Act amended the Land Transfer Tax Act to set out a general anti-voidance rule. This rule applies to transactions that are completed after May 1, 2014. It also applies to transactions that occurred on or before May 1, 2014 if they are part of a series of transactions that is completed after May 1, 2014.
Overpayment and refunds
If you overpaid land transfer tax, you can ask the Ministry of Finance for a refund. Here’s how:
- Write a letter explaining the reason for your refund request and include:
- a copy of the registered conveyance
- evidence of the amount of tax paid on registration
- a copy of the agreement of purchase and sale (including all schedules and amendments)
- a copy of the statement of adjustments
- Mail your letter to the Ministry of Finance, 33 King Street West, PO Box 625, Oshawa, Ontario, L1H 8H9.
There is no time restriction where a refund is requested for land transfer tax paid on registration of a notice or caution where the transfer contemplated in the agreement referred to in the notice or caution did not take place.
First time homebuyers refunds requests must be made within 18 months after the date of the transfer.
All other refund requests must be made within 4 years after the date of payment of the tax.