The Toronto Land Transfer Tax

The Toronto Land Transfer Tax

Anyone looking to get into the Toronto real estate market should be aware of the Toronto Land Transfer Tax (“TLTT”).

This TLTT is applicable to purchases of all properties in the City of Toronto and is levied in addition to the Province’s already existing Land Transfer Tax (“LTT”).  The TLTT is also charged on the disposition of beneficial interests in property within the City of Toronto.

For those of you new to the real estate market, TLTT (along with LTT) is collected by your lawyer directly from you and is paid upon the closing of your purchase transaction to the City of Toronto and the Province of Ontario respectively.  TLTT is charged on a graduated basis depending on the value of the consideration paid for the property.  A detailed summary of the formula for calculating the TLTT is available on the City of Toronto’s website at www.toronto.ca/taxes.  By way of brief example, a $400,000.00 single-family home in Toronto will now cost the purchaser TLTT of $3,725.00; and keep in mind that this is in addition to the $4,475.00 which is currently payable under the Provincial LTT system.

As you can see, the TLTT presents an onerous tax burden for home buyers; particularly those entering into the market for the first time.  As such, Toronto City Council decided to grant first-time homebuyers a break vis-à-vis the TLTT.  Specifically, first-time purchasers of newly constructed or re-sale residential properties in Toronto (with two or less single-family residences) will receive a rebate up to a maximum of $3,725.00.  Unfortunately for those of us who have owned property before, we get hit with the full one-two punch of the TLTT + LTT.

For more detailed information on these taxes and their associated rebates we recommend you speak to a real estate lawyer.