How is land transfer tax calculated on commercial property in Ontario?

Ontario land transfer tax applies to commercial property purchases using the same graduated rate structure as residential properties, although the applicable rate tiers and thresholds differ for non-residential land. The rate schedule for commercial and industrial property does not include the higher residential rate tier that applies to homes above certain price points — but commercial prices are often high enough that significant LTT still results.

For transfers that include both land and personal property (such as equipment or inventory), only the value attributable to the land is subject to LTT. Properly allocating value between land and personal property in the purchase agreement can be important and should be reviewed by a lawyer.

Buying shares of a corporation that holds real property is generally not a land transfer and therefore does not attract LTT directly — but this structure has other legal and tax implications. Whether to structure a commercial deal as an asset purchase or a share purchase involves many considerations beyond LTT.