If you’re considering buying a property in Ontario, you will likely have to pay land transfer tax (LTT). LTT is a tax that is imposed by the provincial and municipal governments on the purchase of a property. It is important to understand the LTT and how it works, so you can budget accordingly and avoid any surprises during the buying process. In this blog post, we will cover everything you need to know about LTT, including how it is calculated, who has to pay it, and any exemptions that may apply.

What is Land Transfer Tax (LTT)?

Land transfer tax (LTT) is a tax that is imposed on the purchase of a property by the provincial and municipal governments. The amount of LTT you have to pay is based on the purchase price of the property. It is important to note that LTT is different from property tax, which is an ongoing tax that is based on the assessed value of the property.

How is LTT Calculated?

The amount of LTT you have to pay is based on the purchase price of the property. In Ontario, there are two different tax rates that are used to calculate LTT. The first tax rate applies to the portion of the purchase price up to $400,000, while the second tax rate applies to the portion of the purchase price that is over $400,000.

For example, let’s say you’re purchasing a property for $500,000. The LTT would be calculated as follows:

  • The first $400,000 would be taxed at a rate of 1.5% = $6,000
  • The remaining $100,000 would be taxed at a rate of 2.0% = $2,000

The total LTT you would have to pay in this example is $8,000.

Who has to Pay LTT?

In Ontario, the buyer is responsible for paying the LTT. However, in some cases, the seller may agree to pay a portion or all of the LTT as part of the negotiation process. It is important to discuss this with your real estate agent and lawyer to determine who is responsible for paying the LTT in your specific situation.

Are there any Exemptions for LTT?

Yes, there are some exemptions that may apply to LTT. For example, if you are a first-time homebuyer in Ontario, you may be eligible for a refund of up to $4,000 of the LTT. To be eligible for the first-time homebuyer refund, you must meet the following criteria:

  • You must be a Canadian citizen or permanent resident
  • You must be 18 years of age or older
  • You must occupy the home as your principal residence within nine months of the date of transfer

Additionally, some other exemptions may apply in certain situations, such as transfers between spouses or transfers resulting from a court order.

Conclusion

Land transfer tax (LTT) is an important consideration when purchasing a property in Ontario. It is based on the purchase price of the property and is calculated using a two-tiered tax rate system. The buyer is typically responsible for paying the LTT, but in some cases, the seller may agree to pay a portion or all of the LTT. First-time homebuyers may be eligible for a refund of up to $4,000 of the LTT, and other exemptions may apply in certain situations. By understanding LTT, you can budget accordingly and avoid any surprises during the buying process.