Land transfer tax is usually the biggest line on a buyer's closing statement, and it is due in full on closing day. It cannot be added to your mortgage. The good news for anyone buying in London or St. Thomas: you pay one land transfer tax here, not two.
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548 490 4577How the Ontario calculation works
The tax is tiered, like income tax. Each portion of the price is taxed at its own rate rather than the whole price at one rate: 0.5% on the first $55,000, 1% from $55,000 to $250,000, 1.5% from $250,000 to $400,000, and 2% above $400,000. Most local purchases land in that fourth band, which is why the total climbs steadily with price.
| Purchase price | Ontario land transfer tax | After the full first-time buyer refund |
|---|---|---|
| $400,000 | $4,475 | $475 |
| $500,000 | $6,475 | $2,475 |
| $600,000 | $8,475 | $4,475 |
| $700,000 | $10,475 | $6,475 |
| $850,000 | $13,475 | $9,475 |
The first-time buyer refund
Ontario refunds up to $4,000 of land transfer tax to eligible first-time buyers, which covers the tax entirely on a home priced around $368,000 or less. Above that, you pay the difference. Your lawyer normally claims it at closing so the money never leaves your account, but it can also be claimed afterward. To qualify you must be at least 18, must not have owned a home anywhere in the world, and your spouse must not have owned one while you were together.
Why the Toronto question keeps coming up
Buyers moving here from the GTA often budget double, because Toronto charges a municipal land transfer tax on top of the provincial one. That municipal tax applies inside the City of Toronto only. In London, St. Thomas and the rest of Elgin and Middlesex, there is one tax. For a $700,000 purchase, that difference is roughly ten thousand dollars that stays in your pocket.
Frequently asked questions
When do I pay land transfer tax?
On closing day, through your lawyer, as part of the funds you wire before keys change hands. It is not part of your deposit and it cannot be financed into the mortgage, so it has to be cash you already have.
Do I pay land transfer tax on a new build?
Yes. It is charged on the purchase price of any property transfer, new or resale. On a new build the tax is calculated on the price before HST, and your lawyer will confirm the exact figure on the statement of adjustments.
What if only one of us is a first-time buyer?
You can still claim a portion. Where one spouse has owned a home before, the refund is generally limited to the share of the home the first-time buyer is acquiring, so a half interest means up to half the refund. Have your lawyer confirm the split before closing, because it depends on how title is being taken.
