Land Transfer Tax
Land transfer tax, a payment made to the government for transferring property from the seller to the buyer, is a complex process that should be calculated by a professional. Since it is not imposed all across Canada and the means of calculation varies from province to province, depending on its jurisdiction, you will want to take advantage of your realtor’s expertise. Land transfer tax is typically calculated on the value of the property as registered with the land registration office. The fees are calculated between 0.5 – 2% of the property’s total value. Generally, 1% applies to the first $200,000, and 2% to the remainder. As with most taxes, there are some exceptions.
Since 2005, first-time home buyers are exempt from this tax, provided they meet certain criteria. Individuals must be Canadian citizens who have never owned a home anywhere else in the world. They must have been living in the province for at least one year prior to the purchase and have filed at least two Canadian tax returns within the past six years. Finally, they must occupy their new home for at least the first year of ownership.
As of December, 2007, land transfer tax exemption applies not only to resale homes, but to newly constructed homes as well. For exemptions on vacant lot purchases, a house must be constructed within one year of closing and the owner must live in that house for the remainder of the year. For more detailed information about the Land Transfer Tax, go to the Ontario Goverment's Land Transfer Tax webpage by clinking this link.
You can calculate the land transfer tax that may be payable on your property by clicking here, which will take you to the Ottawa Real Estate Board's homepage where you will find a button for Land Transfer Tax & mortgage calculators. For the most accurate advice on how land transfer tax will apply to your purchase, we recommend that you contact your real estate lawyer.
For any general questions may have, please feel free to Contact Us.