Ontario land transfer tax

This post was originally published on July 8, 2011, and was updated on January 5, 2024.

House-hunting can be quite an endeavour. And when you finally find that dream home, don’t let the closing costs take you by surprise. These costs are often overlooked and can amount to a substantial sum. One specific closing cost is the Ontario land transfer tax.

The land transfer tax in Ontario is calculated as a portion of the property value. The tax payment is usually a percentage of the asking price, which is used as an estimate. The tax is progressive, meaning the higher the purchase price, the greater the tax rate.

The first $55,000 of the purchase price of your home is taxed at a marginal rate of 0.5%.

From $55,000 to $250,000 the Ontario Land Transfer Tax is 1.0%.

The next $250,000 to $400,000 is taxed at 1.5%.

The next $400,000 to $2 million is taxed at 2.0%.

Any amount over $2 million is taxed at 2.5%

Use our land transfer tax calculator to calculate your costs based on Ontario mortgage rates.

First-time home buyer land transfer tax rebate in Ontario

First-time home buyers are entitled to rebates to offset the additional costs of the land transfer tax. The provincial rebate is equal to the full amount of tax paid up to $4.000. To acquire this refund, you should apply within 18 months after you purchase your home.

Based on the nature of the tax, for houses valued up to $368,000 the rebate will completely cover the tax costs.

Municipal Land Transfer Tax in Toronto

Within Ontario, homebuyers in Toronto incur an additional closing cost in the form of a municipal land transfer tax.

The tax applies within the following boundaries of the city:

North border: Steeles Avenue

West border: Etobicoke

East border: Scarborough

South border: Lake Ontario.

On January 1, 2024, the City of Toronto introduced an additional threshold for its MLTT, for homes valued at $3 million and above, that contain a maximum of two single-family residences. The new levy starts at 3.5% of the home’s value, and ranges up to 7.5% for homes valued at $20 million and above.

The tax is applied as follows:

Value of Consideration	Rate
Over $3,000,000 and up to $4,000,000	3.5%
Over $4,000,000 and up to $5,000,000	4.5%
Over $5,000,000 and up to $10,000,000	5.5%
Over $10,000,000 and up to $20,000,000	6.5%
Over $20,000,000	7.5%

 

First-time home buyer land transfer tax rebate in Toronto

Toronto first-time home buyers who purchase either new or resale homes are entitled to a reimbursement of up to a maximum of $4,475.

Conditions for eligibility

• The buyer must be over 18 years of age and not have owned a residential property in any country.
• The homebuyer must occupy the home within nine months of the purchase date.
• The buyer's spouse cannot have owned property while being aforementioned buyer’s spouse.
•  The new home must be eligible for home warranty.

Due to the system of the Toronto land transfer tax, if the purchase price of your home is $400,000 or less, you can avoid the municipal tax completely.

It is good to keep closing costs such as land transfer tax in mind while looking for a home. Depending on your financial situation, you may want to consider the extra costs that even a small change in purchase price can incur.