Land Transfer Tax in Ontario: Rebates and the Toronto Double Tax

Land transfer tax is one of the largest closing costs on a home purchase, and it often surprises buyers because it is due on closing day rather than built into the price. Knowing how it works lets you budget before you make an offer.

This article explains when the provincial tax is paid, what it is based on, how the first-time buyer refund works, and why buying in Toronto can mean paying two taxes. Your lawyer can confirm the exact amount for your purchase.

When Ontario land transfer tax is paid and what it is based on

Ontario land transfer tax is payable when the transfer is registered, which happens on closing. It is generally based on the purchase price plus any mortgage or debt assumed.

In plain words, if you take over an existing debt on the property as part of the deal, that debt can count toward the amount the tax is based on, not just the price you pay the seller. Because the tax is tied to registration, it falls due on closing.

How the payment is handled on your closing depends on your situation, so it is worth confirming with a lawyer. Ask for a figure early so it is not a surprise.

Toronto's separate municipal tax

If the home is in the City of Toronto, you generally pay a municipal land transfer tax in addition to the provincial tax. This is why people talk about a Toronto double tax. Other municipalities in Ontario do not generally charge their own.

The two taxes are separate, and the first-time buyer refund rules are not the same for each one. Toronto has changed its rates and brackets over time, so ask your lawyer to calculate both taxes using the current figures.

The first-time homebuyer refund

Eligible first-time homebuyers can get a land transfer tax refund of up to $4,000 for registrations on or after January 1, 2017. It may be claimed at registration to offset the tax, or later from the Ministry of Finance.

Whether you are eligible depends on your own circumstances, so confirm this with your lawyer before closing. Claiming at registration usually reduces the cash you need on closing day.

Extra tax for non-resident buyers

Foreign nationals, foreign corporations and taxable trustees buying residential property anywhere in Ontario pay the Non-Resident Speculation Tax at 25 per cent, effective October 25, 2022. This is in addition to land transfer tax.

In other words, a buyer this tax applies to pays both charges, and it applies to residential property anywhere in Ontario, not only in certain cities. Whether it applies to you depends on your status and how you will hold title, so confirm this with your lawyer before you sign an offer.

What to do next

• Ask your lawyer for an estimate of provincial land transfer tax before you make an offer.
• If the home is in Toronto, ask for the municipal tax to be calculated separately.
• Tell your lawyer whether you have ever owned a home, so refund eligibility can be checked.
• If you are a foreign national, a foreign corporation or a trustee, ask about the Non-Resident Speculation Tax.
• Keep the tax amounts in your closing budget alongside legal fees and adjustments.

Frequently asked questions