How does the Ontario land transfer tax rebate work for first-time buyers?

Ontario's Land Transfer Tax Act provides a rebate to first-time homebuyers to reduce the provincial land transfer tax payable on a qualifying purchase. The rebate reduces or eliminates the provincial LTT for eligible first-time buyers up to a maximum rebate amount set by the province.

To qualify, you must be a Canadian citizen or permanent resident of Canada, be at least 18 years of age, intend to occupy the home as your principal residence within nine months of closing, and never have previously owned a home — anywhere in the world. If you are purchasing with a partner, both must meet the first-time buyer test to claim the full rebate; if only one qualifies, the rebate is proportional.

If you are buying within the City of Toronto, a separate municipal rebate is also available under Toronto's land transfer tax bylaw. The two rebates are applied simultaneously at closing through your lawyer, reducing the amount you need to bring to the closing table. Unlike some other tax credits, the rebates are applied directly to the tax payable rather than refunded after the fact.