When you get land or even a beneficial interest on land, there is a charge known as a Land Transfer Tax. This is paid to the province during the time the transaction closes. While the Land Transfer Tax is typically paid on the amount remaining on a debt or mortgage taken as part of the arrangement and based on what you paid for the land, there have been recent changes and the Land Transfer Tax has a different calculation.

What Is It For?
The Land Transfer Tax not only is based on the amount you paid for the land, there are a few other situations where it is based on the fair market value. These situations include but are not limited to the following:
• If the shares of a corporation are used, the transfer of land to a corporation
• The transfer of a lease with a remaining term that can exceed 50 years
• The transfer of land to a shareholder from a corporation

Rebates and Refunds
For the Ontario Provincial Land Transfer Tax, the maximum first time home buyer rebate amount is $4,000.00. And that is good news because new home buyers do have recourse. In fact, you may qualify for a refund that covers part of the tax and in some cases, all of the tax. Now this first time home buyer rebate amount only covers actual first time buyers. For instance, if a parent and child make a purchase together with equal ownership and the child is the only first time buyer, the rebate only applies to the child. The same thing applies to spouses but if the couple was not married when the party bought the home, then the new home buyer can claim the maximum refund but if both of you owned the home while married, then the rebate does not apply.

What Are the Qualifications?
There are just a few other things to keep in mind in order to get the refund or rebate.
• The home buyer has to be at least the age of 18
• The home buyer cannot have interest in or owned an eligible home at any time, anywhere in the world
• The home must be occupied as a principal residence and this has to take place within nine months of the date of transfer

The refund depends on the date of the agreement of purchase and sale. For instance, if a home was before December 14, 2007 then there is a refund that applied to the sale of a newly built home. However, if the purchase was made after this date, the refund is for all homes, not just those that are newly built but also resales.

The refund amounts vary. Before January 1, 2017 the refund amount was just $2000 as a maximum. However, after this date, the maximum refund you can get has doubled to $4000. However, this only applies to dispositions or conveyances after that date in January of 2017.

Consideration Formula for Residential Purchases
• Up to $55,000.00 x .005
• $55,000.01 to $250,000.00 x .01 – $275.00
• $250,000.01 to $400,000.00 x. 015 – $1,525.00
• $400,000.01 to $2,000,000.00 x .02 – $3,525.00
• $2,000,000.01 and up x .025 – $13,525.00

Consideration Formula for Commercial Purchases
• Up to $55,000.00 x .005
• $55,000.01 to $250,000.00 x .01 – $275.00
• $250,000.01 to $400,000.00 x .015 – $1,525.00
• $400,000.01 and up x .02 – $3,525.00

Land Transfer Tax Calculator

 

 

 

 

 

 

The definition of land itself doesn’t just encompass parcels of land – it also means buildings that are going to be built or constructed, buildings that exist, as well as fixtures which include cabinetry, light fixtures, and appliances that are built-in.

If you have questions about how a real estate lawyer can help with Land Transfer Tax, Oakville Real Estate Law is one of the top firms in Canada for real estate transactions. The firm’s team led by Robert Rose has worked on thousands of transactions the years and have the knowledge and experience you need. For more information on what you need to know about being able to afford a home, please contact us and we will be glad to help.