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Land Transfer Tax and Home Affordability

A house in Canada is expensive enough as is. The national average for a home is $496,000 according to the most recent data by the Canadian Real Estate Association. But it’s not only the property itself that prospective buyers are paying for — there’s also the matter of paying the government a tax upon completion of the transaction.  

Land transfer tax, or the equivalent fee, is set by each province and some municipalities and is calculated as a percentage of the home purchase price. It must be paid in cash to finish the deal and cannot be tacked onto your mortgage as, for example, CMHC insurance is.

But all is not created equal. Fees vary wildly across each province and city. In some places, you’ll end up lining the government’s coffers with tens of thousands of dollars, while in others, chump change will suffice.

This can pose a serious barrier for prospective buyers — not only do they need to save up enough for a down payment, but they must also remember to budget for this tax.  In already-expensive cities like Toronto, it can be prohibitive.

To find out how this impacts affordability in municipalities across the nation, Zoocasa calculated the average land transfer tax in 25 cities across Canada. Zoocasa took into account the average home price as well as any applicable first-time home buyer rebates to find the best and worst cities in Canada for this levy.

Unsurprisingly, the two most expensive cities in Canada, Toronto and Vancouver, top the list for the highest land transfer tax. Recent MLS  listings  in Toronto show that the average property is around $805,000. First-time home buyers would then have to pay 2.1 per cent of the purchase price, or about $16,690, even after a generous first-time buyer rebate of $8,475. Meanwhile, repeat buyers, who are not eligible for rebates,  would pay 3.1 per cent of the purchase price, or over $25,000. In many other places such as the Ottawa real estate market, that would itself equal a down payment.

Canadians looking to avoid paying such a steep levy should look to smaller cities in Ontario, or in Alberta and Saskatchewan.  Windsor and London, Ontario real estate charges zero land transfer tax for first-time home buyers and in Calgary and Edmonton it’s a reasonable 0.1 per cent.

Check out the infographic to see the full list of cities and for more information on land-transfer tax when you’re a repeat home buyer: is a leading real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse real estate listings on the website or the free iOS app.

Photo by Helloquence on Unsplash