Deposits, home inspections, legal fees...
Whenever we start working with a buyer we go though the list of closing costs that they need to budget for.
One of the biggies is land transfer taxes.
Unless you live in Alberta, Saskatchewan, or rural Nova Scotia, land transfer taxes (or “property purchase taxes”) are a basic fact of life.
These taxes, levied on properties that are changing hands, are the responsibility of the purchaser.
Many provinces have multi-tiered taxation systems that can prove complicated.
In Ontario the tax is calculated on the value of the consideration at the following rates:
amounts up to and including $55,000: 0.5%
amounts exceeding $55,000, up to and including $250,000: 1.0%
amounts exceeding $250,000, up to and including $400,000: 1.5%
amounts exceeding $400,000: 2.0%
amounts exceeding $2,000,000, where the land contains one or two single family residences: 2.5%.
On a $1,000,000 purchase, for example, the Ontario land transfer tax would be $16,475.
Purchasing in Toronto?
If you're purchasing a property in the city of Toronto, you'll need to factor in an additional land transfer tax.
On that same $1,000,000 purchase, you're looking at an additional $16,475, bringing your total land transfer taxes to $32,950.
This isn't chump change.
Are you a first time buyer?
First-time buyers of new and re-sale homes are eligible to receive rebates on the provincial and Toronto land transfer taxes.
The maximum provincial land transfer tax rebate for first-time buyers is $4,000 and the maximum Toronto transfer tax rebate for first time buyers is $4,725.
Check out the Ontario Ministry of Finance’s website (here) and the City of Toronto’s website (here) for a more detailed breakdown of these rebates and whether or not you're eligible to receive them.
And for access to a land transfer tax calculator visit ratehub.ca here.
If you’re thinking of making a move and would like to know how we can help, feel free to contact us for more info.