As if Toronto weren’t expensive enough – after all, UBS ranked it the 8th most expensive city in the world in terms of purchasing power – it also is the only city in Canada to mandate a municipal land transfer tax on top of provincial taxes. Land transfer tax, as the name suggests, is due when land is purchased, and is typically calculated as a % of property value at the provincial level.
Toronto land transfer tax rates are broken down in the chart below.
|Purchase price of home||Marginal Tax rate|
|On $55,000 to $400,000||1.0%|
First-time home buyers in Toronto, however, are eligible to receive a refund up to a maximum of $3,275. Based on the rates above, this means first-time buyers with homes of $400,000 or less can avoid the tax altogether.
Another way to avoid the tax, for those with home purchases exceeding $400,000 or who are repeat buyers, is to simply sidestep the land transfer tax borders! The borders are as follows: Steeles Avenue as the North border, Etobicoke as the West border, Scarborough as the East border, and Lake Ontario as the South border. So Vaughan, Richmond Hill, Markham, and Mississauga are all metropolitan surroundings in the Greater Toronto Area (GTA) where you can settle without this added expense.
To calculate your applicable land transfer taxes, you can use Ratehub.ca’s Land Transfer Tax Calculator.