Two Taxes, One City
Toronto is the only municipality in Ontario that charges its own land transfer tax in addition to the provincial one. Both are calculated on a sliding scale based on your purchase price, so the total tax bill rises as the price of the home increases.
First Time Buyer Rebates
Both the province and the city offer rebate programs for qualifying first time buyers, which can significantly reduce or even eliminate the tax owed on lower priced homes. To qualify you generally must be a Canadian citizen or permanent resident and have never owned a home anywhere.
- Must be 18 or older
- Never owned a home worldwide
- Must occupy the home as your principal residence
How the Rebate Is Applied
In most cases your lawyer applies the rebate directly at closing, so you pay a reduced amount rather than paying in full and waiting for a refund. Make sure your lawyer knows you intend to claim the rebate before closing day.
Spousal Rules
If you are buying with a spouse and one of you has owned a home before, this can affect your eligibility for the full rebate. It is worth reviewing your specific situation with your lawyer or broker ahead of time.
Budgeting Even With a Rebate
Even with rebates, buyers of higher priced Toronto homes will likely still owe some land transfer tax, since rebates only cover the tax up to a certain purchase price. Always calculate your expected net tax before finalizing your budget.
Frequently asked questions
- Do I need to apply separately for the provincial and municipal rebate?
- Your lawyer typically applies for both at the same time during closing.
- Is the rebate available on resale and new construction homes?
- Yes, both types of purchases can qualify as long as you meet the first time buyer criteria.
- What happens if I do not qualify as a first time buyer?
- You pay the full combined land transfer tax with no rebate applied.