The land transfer tax (LTT) is an important consideration for anyone purchasing real estate in Toronto. As Canada’s largest city, Toronto levies both provincial and municipal LTT, which can add thousands of dollars to your home-buying costs.
This guide will explain everything Toronto homebuyers need to know about land transfer taxes, including current rates, how the tax is calculated, first-time buyer rebates, and recent changes impacting high-value luxury homes.
What is the Toronto Land Transfer Tax?
The Land Transfer Tax Toronto is a municipal tax that home buyers must pay when purchasing a property within the city of Toronto. It is calculated as a percentage of the home’s purchase price.
Toronto first implemented the municipal land transfer tax in February 2008. Prior to this, homebuyers only paid the Ontario Land Transfer Tax established in 1974. The purpose of the Toronto LTT is to generate revenue for the city’s budget, helping to fund various municipal projects and programs.
Any individual or entity purchasing a property within the City of Toronto boundaries (South of Steeles Ave, East of Etobicoke/Highway 427, West of Scarborough, North of Lake Ontario) is required to pay the Toronto Land Transfer Tax.
This encompasses the former Toronto, East York, Etobicoke, North York, and Scarborough municipalities. Home purchases outside these boundaries do not incur the extra Toronto tax. However, you must still pay the province’s Ontario land transfer tax everywhere in Ontario.
How to Calculate Toronto Land Transfer Tax?
The purchase price of your home determines the land transfer tax bracket and marginal tax rate applied. Toronto has implemented a graduated tax system with progressive marginal rates based on the following thresholds:
| Purchase Price | Marginal Tax Rate |
|---|---|
| Up to $55,000 | 0.5% |
| $55,000.01 to $250,000 | 1.0% |
| $250,000.01 to $400,000 | 1.5% |
| $400,000.01 to $2,000,000 | 2.0% |
| Over $2,000,000 | 2.5% |
| Over $3,000,000 to $4,000,000 | 3.5% |
| Over $4,000,000 to $5,000,000 | 4.5% |
| Over $5,000,000 to $10,000,000 | 5.5% |
| Over $10,000,000 to $20,000,000 | 6.5% |
| Over $20,000,000 | 7.5% |
As of January 2024, the City of Toronto expanded the marginal rates for luxury properties over $3 million containing one or two single-family residences. This change introduced new thresholds of up to 7.5% for homes above $20 million.
For all other property types:
| Value of Consideration | MLTT Rate |
|---|---|
| Up to and including $55,000 | 0.5% |
| $55,000.01 to $250,000 | 1.0% |
| $250,000.01 to $400,000 | 1.5% |
| Over $400,000 | 2.0% |
On top of Toronto LTT, you must also pay the Ontario Land Transfer Tax using the provincial brackets below:
| Purchase Price | Marginal Tax Rate |
|---|---|
| Up to $55,000 | 0.5% |
| $55,000.01 to $250,000 | 1.0% |
| $250,000.01 to $400,000 | 1.5% |
| $400,000.01 to $2,000,000 | 2.0% |
| Over $2,000,000 | 2.5% |
Your total land transfer tax obligation combines the municipal Toronto and provincial Ontario portions.
Land Transfer Tax Rebates for First-Time Homebuyers in Toronto
The City of Toronto offers first-time buyers a rebate of up to $4,475 on the municipal land transfer tax. This rebate will fully cover the Toronto LTT on homes purchased for $400,000 or less. You receive the $4,475 rebate for pricier homes and pay the remaining municipal tax balance.
Similarly, the province provides a rebate of up to $4,000 on the Ontario LTT. This completely rebates the tax on homes purchased for $368,333 or less. Above this threshold, you receive the $4,000 and pay the rest. First-time buyers in Toronto can use these rebates to save up to $8,475 on their combined land transfer taxes.
Read our guide on LTT rebates in Canada to find out if you are qualified for an LTT rebate in Toronto and for more information.
Other Rebates and Exemptions
In addition to the First-Time Home Buyer Rebate, the City of Toronto offers other rebates and exemptions for specific situations:
- Ontario Immigrant Nominee Program: If you are a nominee under the Ontario Immigrant Nominee Program, you may be eligible for an LTT exemption.
- Protected Persons: If you are a protected person (as defined by the Immigration and Refugee Protection Act) at the time of purchase, you may qualify for an LTT exemption.
- Spousal Purchases: If you are purchasing a property with a spouse who is a Canadian citizen, permanent resident, protected person, or nominee, you may be exempt from the LTT.
Example Calculation for Land Transfer Tax for Toronto Home Buyers
Let’s calculate the land transfer tax on a $1,000,000 home:
Ontario Portion:
- $55,000 taxed at 0.5% = $275
- $195,000 taxed at 1.0% = $1,950
- $150,000 taxed at 1.5% = $2,250
- $400,000 taxed at 2.0% = $8,000
- $200,000 taxed at 2.5% = $5,000
Total Ontario Land Transfer Tax = $17,475
Toronto Portion:
- $55,000 taxed at 0.5% = $275
- $195,000 taxed at 1.0% = $1,950
- $150,000 taxed at 1.5% = $2,250
- $400,000 taxed at 2.0% = $8,000
- $200,000 taxed at 2.5% = $5,000
Total Toronto Land Transfer Tax = $17,475
Combined Land Transfer Tax = $34,950
If you are a first-time home buyer, the total tax you need to pay is $34,950 – $8,475 = $26,475
As you can see, the tax quickly adds up. Understanding how to calculate your obligation based on the purchase price and marginal tax rates is crucial when budgeting for a Toronto home purchase.
What is Toronto Vacant Hones Tax?
Starting in 2022, Toronto applied a Vacant Home Tax (VHT), which is set at 1% of a property’s Current Value Assessment for unoccupied residential properties that remain vacant for more than six months during the calendar year.
All property owners in Toronto must submit a declaration of occupancy status each year, even if they reside in the property. The seller completes the declaration if a property is sold between January 1 and the end of the tax declaration period. If the sale occurs after the declaration deadline, the buyer will confirm the property’s status in the subsequent tax year.
Failure to submit a declaration or providing false information can lead to fines. Any unpaid VHT will also be added to the property tax bill, and a lien may be placed on the property.
Land Transfer Tax Toronto FAQs
When Must the Toronto Land Transfer Tax Be Paid?
The Toronto land transfer tax must be paid on your home's closing or possession date before you can take ownership. For resale homes, this is typically 60-90 days after an offer is accepted when the transaction closes. Once your lender sends funds, your lawyer will pay the LTT on closing day. Failure to pay the tax on time can result in late interest penalties from the City of Toronto Revenue Services.
Does the Toronto land transfer tax apply when adding a spouse to the title?
No, transferring ownership to add a spouse is exempt from land transfer tax. However, selling to a non-spouse would incur tax based on property value.
Can I get Toronto land transfer tax refunded if I sell shortly after buying?
No, there are no refunds because you sell shortly after purchasing. The tax is a one-time cost triggered by the purchase transaction.
Is the land transfer tax different for foreign buyers?
Yes, foreign nationals without Canadian residency pay an additional speculation tax of 25% added to both the Ontario and Toronto taxes.
What are the boundaries for Toronto land transfer tax?
The tax applies to homes bought within the City of Toronto, including Etobicoke, North York, Scarborough, East York, and Old Toronto.
Navigating the Toronto land transfer tax system takes some homework for homebuyers. Understanding the marginal tax bracket calculations, first-timer rebates, city boundaries, and recent tax changes allows you to estimate your obligation accurately.
Connecting with a real estate lawyer experienced in Toronto home transactions can also guide you in navigating municipal and provincial taxes and ensure you avoid any penalties or interest charges.
With Toronto boasting some of Canada’s most expensive real estate, accounting for the substantial land transfer taxes is crucial. Budgeting correctly and leveraging available rebates will keep your purchase financially sound as you achieve the dream of home ownership.
