Navigating Land Transfer Tax in Ontario and Toronto
Understanding Ontario's Land Transfer Tax
When you purchase a property or acquire an interest in land in Ontario, you are required to pay the provincial Land Transfer Tax (LTT). This tax is paid to the province when the transaction closes and is a crucial part of the homebuying budget. The term "land" is comprehensive, including not just the property itself but also any buildings, buildings that are yet to be constructed, and fixtures like light fixtures or built-in appliances (Source: Ontario: Land transfer tax).
Typically, the Land Transfer Tax is calculated based on the amount you paid for the land. This calculation also includes the amount remaining on any mortgage or debt that you assume as part of the purchase agreement. However, there are specific situations where the tax is based on the fair market value of the land instead. These instances include the transfer of a lease with a remaining term that can exceed 50 years, or when land is transferred between a corporation and one of its shareholders (Source: Ontario: Land transfer tax).
An Additional Tax for Toronto Properties
Homebuyers in Ontario should be aware that provincial and municipal taxes can differ. If you are planning to buy a property within the City of Toronto, you may be subject to an additional tax. The province notes that in addition to the Ontario Land Transfer Tax, buyers in Toronto may also have to pay the City of Toronto's own municipal land transfer tax (Source: Ontario: Land transfer tax). This means that a property purchase in Toronto involves a separate and additional tax obligation compared to purchases elsewhere in the province. Buyers should factor this into their financial planning when considering properties within the city's boundaries.
Relief for First-Time Homebuyers
To assist those entering the property market for the first time, the Ontario government offers a Land Transfer Tax refund for eligible first-time homebuyers. This program can provide a refund for all or part of the LTT paid (Source: Ontario: LTT refunds for first-time homebuyers).
To qualify for the first-time homebuyer refund, you must meet several conditions:
- You must be at least 18 years of age.
- You cannot have ever owned a home or an interest in a home, anywhere in the world.
- Your spouse cannot have owned a home or an interest in a home anywhere in the world while he or she was your spouse.
It is important to note that any form of previous home ownership disqualifies you from this refund. This includes acquiring a property through purchase, gift, or inheritance (Source: Ontario: LTT refunds for first-time homebuyers). This provincial rule may be different from other federal programs aimed at first-time homebuyers.
How Much is the Refund?
The maximum amount of the refund has changed over the years. For property conveyances or dispositions that occurred on or after January 1, 2017, the maximum refund is $4,000. For transactions before that date, the maximum was $2,000 (Source: Ontario: LTT refunds for first-time homebuyers).
Beginning January 1, 2017, this refund structure means that qualifying first-time purchasers of eligible homes valued at $368,000 or less would pay no provincial land transfer tax. For homes with a value greater than $368,000, qualifying first-time buyers would receive the maximum refund of $4,000 (Source: Ontario: LTT refunds for first-time homebuyers). This refund can be claimed immediately at the time of registration, which can offset the LTT payable. If not claimed at registration, the tax must be paid, and a refund claim can be submitted to the Ministry of Finance afterward (Source: Ontario: LTT refunds for first-time homebuyers).
Important Considerations for Shared Purchases
The refund amount can be affected if you are buying a home with others who do not qualify as first-time homebuyers.
Partial Refunds: If one or more of the purchasers is not a first-time homebuyer, the refund will be reduced. The available refund is calculated proportionately to the interest in the property acquired by the individuals who do qualify for the refund (Source: Ontario: LTT refunds for first-time homebuyers).
For example, consider a parent who is not a first-time homebuyer and a child who is. If they purchase a home with equal 50/50 interests, the child is eligible to claim a refund of 50% of the land transfer tax refund. This claim cannot be more than 50% of the maximum allowable refund of $4,000 for transactions on or after January 1, 2017 (Source: Ontario: LTT refunds for first-time homebuyers).
Parents on Title for Mortgage Purposes: In some cases, a bank may require a parent to be on the title for mortgage purposes, even if they do not have a beneficial interest in the property. In this scenario, the land transfer tax must be paid at registration. However, the child may still qualify for the full first-time homebuyer refund by applying to the Ministry of Finance and providing evidence of the trust, such as a letter from the bank confirming the arrangement or a copy of a trust agreement (Source: Ontario: LTT refunds for first-time homebuyers).
Spouses: A qualifying purchaser may also be able to claim a refund in proportion to their spouse's interest if that spouse owned a home before becoming the purchaser's spouse, but not while they were spouses (Source: Ontario: LTT refunds for first-time homebuyers).
Other Property-Related Taxes in Ontario
Besides the Land Transfer Tax, buyers should be aware of other potential taxes related to property ownership in Ontario.
- Non-Resident Speculation Tax (NRST): This is a 25 per cent tax on the purchase of residential property located anywhere in Ontario by individuals who are not citizens or permanent residents of Canada, or by foreign corporations and taxable trustees (Source: Ontario: Land transfer tax).
- Harmonized Sales Tax (HST): The HST does not apply to the purchase of resale homes. However, it does apply to newly constructed or substantially renovated homes. Buyers of new homes may be eligible for a rebate of up to $24,000 of the provincial portion of the HST (Source: Ontario: Land transfer tax).
Understanding these taxes is a key step in preparing for the costs of buying a home in Ontario. This information is for general guidance and does not constitute legal or financial advice.
Sources
General information only, not legal, tax or financial advice. Figures are taken from the official sources above as of November 03, 2026.
Farshad Fazaeli, Salesperson · International Realty Firm, Inc., Brokerage · 647-667-5555
FAQ
How is Ontario land transfer tax calculated?
Ontario land transfer tax is charged in brackets on the value of the consideration (usually the purchase price, plus any debt you assume): 0.5% on the first $55,000, 1.0% from $55,000 to $250,000, 1.5% from $250,000 to $400,000 and 2.0% above $400,000. For land with one or two single-family homes, the part above $2,000,000 is taxed at 2.5% (Ontario Ministry of Finance).
How much Ontario land transfer tax is payable on a $400,000 home?
Ontario's own worked example gives $4,475: $275 on the first $55,000, $1,950 on the next $195,000 and $2,250 on the last $150,000.
Do Toronto buyers pay a second land transfer tax?
Yes. A purchase inside the City of Toronto also pays the Municipal Land Transfer Tax (MLTT) on top of the provincial tax. Toronto uses the same brackets up to $2,000,000 and 2.5% from $2,000,000 to $3,000,000. From April 1, 2026, homes with one or two single-family residences pay higher rates above $3,000,000: 4.40%, 5.45%, 6.50%, 7.55% and 8.60% over $20,000,000 (City of Toronto).
What land transfer tax refunds can first-time buyers get?
Eligible first-time buyers can get up to $4,000 back on the Ontario tax and up to $4,475 back on the Toronto MLTT. You must be at least 18, live in the home as your main residence within nine months, and neither you nor your spouse (while married to you) can have owned a home anywhere in the world. Toronto also requires Canadian citizenship or permanent residence, or getting it within 18 months.
Do foreign buyers pay extra tax in Ontario and Toronto?
Yes. Ontario's Non-Resident Speculation Tax is 25% (since October 25, 2022) on residential property bought by foreign nationals. In Toronto, foreign buyers of certain residential properties also pay a 10% Municipal Non-Resident Speculation Tax, in force since January 1, 2025. Both are charged on top of the regular land transfer taxes.
Richmond Hill & GTA · International Realty Firm, Inc., Brokerage
647-667-5555 · info@melk.ca