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What Are Land Transfer Taxes (& Do I Need to Pay Them)?

What Are Land Transfer Taxes (& Do I Need to Pay Them)?

hand writing the word tax in large letters on a CalendarThey say that there are two things in life that are inevitable; death and taxes, and when it comes to buying a home, there are definitely taxes involved that every home buyer needs to know about. One question I get often is about land transfer taxes; specifically, who needs to pay them, how it works, and how much they will cost, so let’s explore this topic in a bit of detail.

Who pays land transfer taxes?

Anyone who acquires real estate in Ontario pays land transfer taxes, whether it’s a house, condo, commercial property, or vacant lot on which a building will be constructed. Land transfer taxes apply not just to a home purchase, but also if a home is given as a gift or inherited. It’s also important to know that anyone who sells their home does not have to pay land transfer taxes, only the buyers or people who acquire the property.

How it works

Land transfer taxes are paid directly to the Province, and go into the pool of funds that pay for things like healthcare, education, highways, and so on. It’s worth noting that land transfer taxes must be paid on the closing date, which may not be the same as the date you take occupancy of your home. For example, if you decide to do renovations before moving in, you’ll still need to pay the land transfer taxes on your closing date. If you have a real estate lawyer (highly recommended), they will arrange for land transfer taxes to be paid when the deed to the new home is transferred to your name, but you’ll have to provide them with the cheque or money transfer first.

How much will you pay?

The amount paid for this specific real estate tax is based on the price paid for the property, as well as the amount that remains on the mortgage that’s assumed (where applicable). Here in Ontario, there is a sliding scale to determine what amount of taxes will be paid (Note: the City of Toronto has higher property tax rates and a different formula). It’s multi-step calculation; here’s a break down of how it works:

  • 0.5% – on the first $55,000
  • 1.0% – on portion between $55,000.01 – $250,000
  • 1.5% – on portion between $250,000.01 – $400,000
  • 2.0% – on portion between $400,000.01 – $2,000,000
  • 2.5% – on anything over $2,000,000.01

For example, if you have purchased a home valued at $400,000, you will pay $4,475 in land transfer taxes. If your new home costs $650,000, your tax bill goes up to $9,475. Be sure to check out this online calculator so you can determine the proper amount you’ll need to pay: 

As you can see, this tax amount can be quite overwhelming, and many people neglect to properly budget for it. It’s important to be aware of all closing fees long before you sign the dotted line on any home purchase.


There is a lot of available information for first-time home buyers, especially when it comes to what to expect and how to get started. First-time home-buyers are often in a bigger bind to save for this particular tax, in addition to the down payment and other costs. The good news is that qualifying first-time buyers in Ontario can receive a land transfer tax rebate up to $4000 on homes with a purchase price over $368,333, and if the home purchase price is less than that, they receive a full rebate. Be sure to do your research and talk to a qualified professional to make sure that you are eligible for any government exemptions.

There are important financial obligations involved with buying a home, and it’s my job as an experienced mortgage broker to inform my clients about these issues so there are no surprises – your home buying experience should be a happy one, not a stressful one! If you are interested in buying a home in Barrie or surrounding areas, be sure to email or call me today at 705-315-0516 to learn more about my services and how I can help you get the keys to your next home.

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