Land Transfer Tax in Ontario
Purchasers in Ontario add Land Transfer Taxes to their list of closing costs. Land transfer taxes are levied on properties that are changing hands, are the responsibility of the purchaser.
Many provinces have multi-tiered taxation systems that can prove complicated. If you purchase a property for $260,000 in Ontario, for example, 0.5 per cent is charged on the first $55,000, 1 per cent is charged on $55,000 - $250,000, while the $250,000 - $400,000 range is taxed at 1.5 per cent. Your total tax bill? $2,375.00
Ontario's Land Transfer Tax:
•Up to $55,000 X 0.5 % of total property value
•From $55,000 to $250,000 X 1 % of total property value, less $275
•From $250,000 to $400,000 X 1.5 % of total property value, less $1525
•From $400,000 up X 2 % of total property value, less $ 3525
Additional New Toronto's Land Transfer Tax:
Toronto home buyers will pay additional new tax rates (on purchase agreements signed after Dec 31, 2007 and close after Feb 1, 2008)
•0.5% on first $55,000,
•1% on next $345,000, and
•2% on portion over $400,000
Exemption: First time buyer do not pay the new tax on the first $400,000 of a property purchase. Discuss new Toronto's new land transfer tax
Land Transfer Tax Rebate
Land transfer Tax rebate is a permanent program allowing a rebate of provincial land transfer tax otherwise payable up to $2000 for all agreement of purchase and sale entered into after March 31, 1999 (being the land transfer tax on a $227,500 home, using above calculation). As of Dec 14, 2007, resale home buyers are eligible for Ontario's New Land Transfer Tax Rebate
Eligibility of the buyer:
•must be at least 18 years old
•must be first time home buyer and occupy the home as a principle residence no later than 9 months after the date of the conveyance
•must never have owned, or had any ownership interest in, an eligible home anywhere in the world while he/she was a purchaser's spouse or same sex partner
Eligibility of the property
•must be newly constructed home
•builder must be registered by TARION warranty corporation
Restrictions on amount claimed:
•between non-spouses: refund is reduced for the proportionate interest of the co-owner who is not eligible
•between spouses: If one spouse is first time home buyer and the other owned a home before, but not since becoming a spouse of the first time home buyer, then the spouse who is the first time home buyer would claim the whole rebate
Other conditions
Rebate received on day of registration at land registry office
•18 month deadline (from the date that the conveyance is registered) if applying for refund directly from Land Transfer Tax office
•Qualifying tax payer or their solicitors may claim an immediate refund at the time of registration.
For more information on land transfer tax rebate speak to your real estate lawyer or visit government's revenue website.
Ontario tax guidelines on amount of land transfer tax buyers pay for a newly constructed home.
Purchasers of new homes often agree to a base price and then advise the builder of any extras and upgrades they would like to add. As per the tax bulletin of March 2006 the value of these extras and upgrades are to be included in determining the amount to be declared in the land transfer tax statements, called the "value of the consideration".
The bulletin says this includes items that are part of the permanent structure, such as architectural changes, extra doors and entrances, whirlpool baths, finished basements, roughed in washrooms and fireplaces. It also includes upgrades to flooring, cupboards, doors, windows and counters, as well as exterior upgrades like lot premiums, tree plantings, driveway paving, sodding and grading.
The guidelines also appear to introduce a form of double taxation. The bulletin states that the value of the consideration is to include the value of any liability assumed and miscellaneous costs incurred by the builder as part of the arrangement relating to the conveyance that are passed to the new homebuyer. These include lot levies, development charges, school levies, architect fees, and the Ontario New Home Warranty Plan Fee.
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