What taxes do I pay when buying a home in Ontario?
Several taxes can apply when buying a home in Ontario, depending on the type of property and where it is located.
Land transfer tax (LTT) is paid by every buyer based on the purchase price. The provincial government charges LTT; the City of Toronto charges an additional municipal LTT on top. Both are graduated rates — you pay a percentage on each tier of the purchase price.
HST (Harmonized Sales Tax) applies to newly constructed and substantially renovated homes. For most resale homes (previously owned and lived in), HST does not apply to the purchase price. HST does apply to legal fees, home inspection fees, and other services regardless of the property type.
Property tax is an annual charge set by the municipality based on the assessed value of your home. It is not a "buying" tax, but it is an ongoing ownership cost that begins the moment you take title. Property tax is collected by your municipality and funds local services.
First-time buyers may be eligible for land transfer tax rebates that partially offset the LTT. Your lawyer handles LTT collection and any applicable rebates at closing.
Key takeaways
- Land transfer tax is the primary tax on every Ontario home purchase.
- Toronto buyers pay both provincial and municipal LTT.
- HST applies to new construction; resale prices are generally HST-exempt.
- Annual property tax begins as soon as you own the property.