What You Should Know:
- First-time home buyers in Ontario can receive a land transfer tax refund of up to $4,000
- You’ll receive the maximum Ontario land transfer tax refund amount if you’re a first-time home buyer that is purchasing a home in Ontario with a price of $368,000 or less
- First-time home buyers in Toronto can also receive a municipal land transfer tax rebate of up to $4,475
- If you’re a first-time home buyer in Toronto and your home’s purchase price is less than $400,000, you will receive the full Toronto land transfer tax rebate
- First-time home buyers purchasing a home in Toronto will receive both a municipal tax rebate and a provincial tax rebate
How to Calculate The Ontario Land Transfer Tax Refund Amount:
Ontario land transfer tax is calculated based on marginal tax rates based on the purchase price of your home. The Ontario Land Transfer Tax refund applies to the provincial land transfer tax portion. The refund is a flat amount that applies to the tax payable up to a maximum refund limit of $4,000. In other words, you can receive up to $4,000 off the land transfer tax if you are a first-time home buyer in Ontario.
If the land transfer tax payable is less than $4,000, which will happen if your home’s purchase price is $368,000 or less, then you will not have to pay any Ontario land transfer tax. If your land transfer tax payable is more than $4,000, then the amount that you will have to pay will be discounted by $4,000.
Ontario Land Transfer Tax vs Toronto Land Transfer Tax:
Did you know that homes purchased in Toronto will be subject to both a provincial land transfer tax and a municipal land transfer tax? Homes purchased anywhere else in the province will only be subject to the provincial land transfer tax. However, the City of Toronto provides support to first-time home buyers by also providing a land transfer tax rebate for new home buyers. While you are subject to both land transfer taxes as a home buyer, you may also be eligible for refunds and rebates for both taxes as well.
Who qualifies as a first-time home buyer in Ontario?
To qualify as a first-time home buyer, you must not have owned a home previously anywhere in the world, or have any interest or stake in a home. Your spouse must not have owned or have an interest in a home while they were your spouse. To be eligible for Ontario’s land transfer tax refund, you must also be at least 18 years old.
How do I qualify for Ontario’s Land Transfer Tax Refund?
In addition to being a first-time home buyer and being 18 years old, you must also be a Canadian citizen or a permanent resident. If you are currently not a Canadian citizen or a permanent resident, you have 18 months after your home registration to become one to qualify for the refund. The home you are purchasing must be your principal residence within nine months.
While you can claim the refund when registering your property to offset the land transfer tax payable, you have up to 18 months after registration to claim the refund.
If one or more purchasers of the home is not a first-time home buyer, you may still be eligible for a refund of your land transfer tax. For example, if two individuals purchase a home but only one of them is a first-time home buyer, then only 50% of the transfer tax refund can be claimed.
Toronto First-Time Home Buyer Incentive
The City of Toronto also provides a Municipal Land Transfer Tax Rebate for first-time home buyers purchasing a home in Toronto. A rebate of up to $4,475 is given to first-time home buyers purchasing newly constructed or resale residential properties.
The home buyer will need to be a Canadian citizen or a permanent resident to qualify for the rebate. The buyer will also qualify if they become a Canadian citizen or a permanent resident within 18 months. While you can claim the rebate at the time of registration, you have up to 18 months to claim the rebate.
How to Calculate The Toronto Land Transfer Tax Refund Amount?
Both Toronto land transfer tax and Ontario land transfer tax applies to homes purchased within the City of Toronto. Land transfer tax rebates are incentives offered to first-time home buyers, but the municipal tax rebate is calculated separately from the provincial tax rebate.
If you’re a first-time home buyer in Toronto, you can receive a rebate of up to $4,475 off your municipal land transfer tax and a rebate of up to $4,000 off your provincial land transfer tax. Currently, Toronto land transfer tax rates are the same as Ontario land transfer tax rates. This means that a home buyer in Toronto will be paying double the land transfer tax compared to a home buyer for the same home purchase price in another municipality. First-time buyers are eligible to receive a rebate for both portions.
Comparing First-Time Home Buyer Incentives:
Let’s look at a first-time home buyer in Mississauga that is purchasing a $800,000 home, and a first-time home buyer in Toronto that is also purchasing a $800,000 home. With the first-time home buyer incentives for Ontario, the Mississauga home buyer will receive a $4,000 rebate and pay total land transfer tax of $8,475. The Toronto home buyer will receive $8,475 in land transfer tax rebates but still have to pay $16,475.Comparing First-Time Home Buyer Rebates in Ontario – $800,000 Home
|Total Land Transfer Tax Rebates||Total Land Transfer Tax|
|Rest of Province||$4,000||$8,475|
The presence of a municipal land transfer tax in Toronto means that first-time home buyers in Toronto will be paying more land transfer tax than buyers outside of Toronto if the home’s purchase price is more than $368,000. With average home prices in Toronto’s housing market being well above $1 million, the municipal land transfer tax rebate offers some relief, but for a limited number of homes. Additional incentives for first-time home buyers are available, such as the CMHC first time home buyer incentive and the Home Buyer’s Plan. For more information, visit our page about first-time home buyer incentives in Canada.