When you buy land or an interest in land in Ontario, you pay land transfer tax. First-time homebuyers of an eligible home may be eligible for a refund of all or part of the tax. To claim a refund, you must be at least 18 years of age, you cannot have owned a home or an interest in a home anywhere in the world, and your spouse cannot have owned a home or interest in a home, anywhere in the world while he or she was your spouse.
Previous ownership in a home means you do not qualify for the land transfer tax first-time homebuyer’s refund. The method of acquiring the home (e.g., purchase, gift or through an inheritance) is not relevant.
Land transfer tax applies to all conveyances of land in Ontario. First-time homebuyers may be eligible for a refund of all or part of the tax payable.
· For agreements of purchase and sale entered into before December 14, 2007, the refund only applies on the purchase of a newly constructed home.
· For agreements of purchase and sale entered into after December 13, 2007, the refund applies to all homes, whether newly constructed or resale.
Qualifying taxpayers may claim an immediate refund at time of registration as follows:
· If registering electronically, by completing the required statements under the Explanation tab of the electronic land transfer tax affidavit, or · If registering by paper, by filing an Ontario Land Transfer Tax Refund Affidavit for First-Time Purchasers of Eligible Homes form at the Land Registry Office.
If the refund is claimed at the time of registration, it may offset the land transfer tax that would be payable. If the refund is not claimed at registration, the tax must be paid, and a claim for the refund may be submitted to the Ministry of Finance. No interest is paid on this refund. Procedures for refunds are outlined below, under Procedures to apply for the refund.
To qualify for the Ontario Land Transfer Tax Refund for First-Time Homebuyers, you must meet the following criteria:
· You must be a Canadian citizen or permanent resident of Canada,
· You must be 18 years of age or older,
· You must live in the home within 9 months of purchasing it,
· You cannot have owned a home before, and
· If you have a spouse, they cannot have owned a home during the time they have been your spouse.
Based on the Ontario land transfer tax rates, the rebate will cover the full tax amount up to a maximum home purchase price of $368,333. For homes with purchase prices over $368,333, homebuyers will qualify for the maximum rebate, but will still owe the remainder of their land transfer tax.
If you are buying your home with your spouse, but only one of you qualifies for this rebate, you can still receive 50% of the rebate. The refund will be proportionate to the interest acquired by the individuals who qualify for the refund.
Refunds application can be made at the time of registration as below:
· For electronic registrations, all forms under the Explanation tab of the electronic land transfer tax affidavit need to be completed; or
· For paper registration, Ontario Land Transfer Tax Refund Affidavit for First-Time Purchasers of Eligible Homes form needs to be filed at the Land Registry Office
· Maximum of $2,000 in the event of all dispositions and registrations which occurred before January 1, 2017;
· Maximum of $4,000 in the event of all dispositions and registrations occurring after January 1, 2017
Claiming refunds at the time of registration, seeks to offset the tax amount payable. In the event, where the refund is not claimed at registration, the applicant will need to pay the tax and apply for a refund to the Ministry of Finance.
If you qualify, your real estate lawyer will help you file the necessary paperwork. You can file for your land transfer tax rebate electronically.
Assistant Manager, Real EstateTreadstone Associates