How to Claim the Ontario Land Transfer Tax Refund at Closing

If you are buying your first home in Ontario, the land transfer tax refund can take a meaningful amount off your closing costs. The harder question for most buyers is practical: how does the refund actually get applied on closing day, and what happens if nobody claims it?

This article walks through who qualifies, how the refund is claimed, what documents are involved and what to do if it was missed. Your lawyer normally handles the registration, but it helps to know what to expect and what to ask.

How much the refund is worth

The first-time homebuyer refund is up to $4,000 for conveyances on or after January 1, 2017. No land transfer tax is payable on the first $368,000 of value for eligible homes.

The refund sits on top of the regular provincial rates. These apply to agreements after November 14, 2016 and have been in effect from January 1, 2017.

Whether a separate municipal land transfer tax applies to your purchase depends on where the home is, so it is worth confirming with your lawyer.

Who qualifies

The rules look at you and, in some cases, your spouse. To be eligible you generally need to meet all of these points.

• You are at least 18.
• You will occupy the home as your principal residence within nine months of the transfer.
• You have never owned an eligible home anywhere in the world.
• If your spouse owned an eligible home while they were your spouse, that disqualifies both of you.
• For agreements after November 14, 2016, you are a Canadian citizen or permanent resident.

If you are buying with someone who does not qualify, the refund is reduced proportionately. That matters for couples, family members buying together and parents helping a child. Talk to your lawyer before closing about how your ownership will be set up.

How the refund is applied at closing

For an electronic registration, the refund is claimed at closing by selecting the appropriate statements under the Explanation tab of the land transfer tax section. This offsets the tax payable. In other words, you normally do not pay the tax and wait for money back; the refund reduces what is owed on closing day.

For a paper registration, the Refund Affidavit (form 013-0300) is filed at the Land Registry Office.

Because the statements are entered as part of the registration, your lawyer needs accurate answers from you about your ownership history, your citizenship or residency status and when you plan to move in. Give complete answers, including about a spouse, and tell your lawyer early if anything is uncertain.

If the refund was missed at closing

If the refund was not claimed at closing, the tax must be paid on registration. You then apply to the Ministry of Finance within 18 months after registration. No interest is paid on the refund.

Expect to provide supporting documents. These include the following.

• The registered conveyance.
• The agreement of purchase and sale with schedules.
• The statement of adjustments.
• Proof of occupancy. Utility bills and home insurance are not acceptable.
• Proof of citizenship or permanent residence.

Proof of occupancy can take time to gather, so keep copies of records that show when you moved in, and ask your lawyer what would be accepted other than utility bills and home insurance.

What to do next

• Tell your lawyer at the start that you believe you are a first-time buyer, and give details about any past or spouse's ownership anywhere in the world.
• Confirm your citizenship or permanent resident status and have proof ready.
• Confirm who is on title and whether any co-buyer qualifies, since a co-buyer who does not qualify reduces the refund.
• Ask your lawyer to explain, before closing day, how the land transfer tax and your refund will be handled in your purchase.
• Plan when you will move in so you occupy the home within nine months of the transfer.
• If the refund was missed, note the 18-month deadline and gather the documents listed above.

Frequently asked questions