If a builder buys back my home, is land transfer tax owed on that transaction?

When a builder purchases your home back from you, that is a standard real estate transaction — a sale of land — and Ontario land transfer tax obligations apply in the normal way. In a builder buyback, you are the seller and the builder is the buyer. The buyer (the builder, in this case) is responsible for paying Ontario LTT.

This is the same rule that applies to any land purchase: the buyer pays LTT based on the purchase price at closing. Since the builder is the buyer here, the builder owes the LTT. From your perspective as the seller, you do not pay LTT — you receive the purchase price.

Buyback transactions with builders can have other tax implications, particularly income tax or HST considerations, depending on how the original purchase was structured and what the buyback price is. If a builder offers to buy back your home — whether as part of a trade-in program, a failed development dispute settlement, or otherwise — have a real estate lawyer review the agreement before signing.