In many Canadian provinces, the most expensive closing cost a homebuyer will face is their land transfer tax. We say many because there is no land transfer tax (LTT) in Calgary, Alberta. Instead, the city charges a much smaller land title transfer fee. However, just because it’s small, that doesn’t mean you should pay it without understanding how it’s been calculated. Let’s take a look at how LTT works in Calgary.
Calgary Land Transfer Tax
In Calgary, your land title transfer fee is a small fee you have to pay for with cash on closing day. There are two parts that make up the fee: one part is based on the value of your home and the other is based on your mortgage amount. The rates for the two parts are as follows:
So, in Calgary, you pay:
- $50 + $1 for every $5,000 or portion thereof of the property value, and
- $50 + $1 for every $5,000 or portion thereof of the mortgage loan amount.
But let’s see how it actually works.
Example Calgary Land Transfer Tax Calculation
You’re a first-time homebuyer who wants to get into the Calgary housing market. After looking at multiple units, you finally put in an offer on a 1-bedroom condo and the seller accepts. Congrats! For the price of $202,500, this condo will be yours to call home – but first you need to get your mortgage financing in place and pay all your closing costs, including your land title transfer fee.
To calculate your fee, you must first figure out how many $5,000 portions exist in the value of your property. Since you paid $202,500 for your condo, you would divide that by $5,000 to get 41. Tack on the $50 base fee and the first part of your land title transfer fee is $91.
Once you know that, you then need to determine how many $5,000 portions exist in the mortgage loan amount you need to borrow. Assuming you put down 20% ($40,500) to avoid CMHC insurance, your mortgage loan would be $162,000. Divide that amount by $5,000 and you’ll get 33. Again, tack on the $50 base fee and the second part of your land title transfer fee is $83.
In the end, the total land title transfer fee on your Calgary condo would be $174.
Calgary Land Transfer Tax Rebate
While some provinces offer land transfer tax rebates to first-time homebuyers, Calgary does not offer a rebate for its land title transfer fee.
When you are considering buying a home, it’s important to know all of the closing costs ahead of time, so you can budget your finances accordingly. Fortunately, Calgary buyers don’t need to save thousands of dollars for their land transfer tax, but it’s still important to know that this fee exists and be prepared to pay for it on closing day.