Land Transfer Tax: What You Need to Know When Buying a Home in Ontario – Know the Costs, Plan with Confidence
When purchasing a property, one of the largest expenses—aside from the purchase price—is the land transfer tax. This is a mandatory tax that home buyers must pay when a property changes ownership, and unfortunately, it can be quite substantial.
Understanding Land Transfer Tax in Ontario
In Ontario, all home buyers are required to pay the Provincial Land Transfer Tax (PLTT). If you’re buying within Toronto, you will also have to pay an additional tax called the Municipal Land Transfer Tax (MLTT).
What other costs are associated with buying a home? Watch our video about home buyer costs right here.
How to Calculate Your Land Transfer Tax
The best way to determine how much land transfer tax you owe is by using an online land transfer tax calculator. To get an estimate, you’ll need to enter:
- The purchase price of the property
- The location (Ontario or Toronto)
- Whether you are a first-time home buyer
Here’s a breakdown of the Provincial Land Transfer Tax rates:
And here’s a breakdown of Municipal Land Transfer Tax rates for Toronto:
Wondering how much land transfer tax you’ll need to pay? Check out our land transfer tax calculator right here.
Examples of Land Transfer Tax Costs
Example 1: First-Time Home Buyer in Toronto ($700,000 Purchase Price)
- Provincial Land Transfer Tax: $10,475
- Municipal Land Transfer Tax: $10,475
- First-time home buyer discount: $4,000 (PLTT) + $4,475 (MLTT)
- Total land transfer tax owed: $12,475
To qualify for this discount, you must not have ever owned property anywhere in the world.
Example 2: Non-First-Time Home Buyer in Toronto ($1,500,000 Purchase Price)
- Provincial Land Transfer Tax: $26,475
- Municipal Land Transfer Tax: $26,475
- Total land transfer tax owed: $52,950 (No discounts apply.)
Example 3: Buying in Mississauga vs. Toronto ($1,500,000 Purchase Price)
If the same $1,500,000 property was purchased in Mississauga instead of Toronto:
- Only the Provincial Land Transfer Tax applies: $26,475
- Total land transfer tax owed: $26,475 (No MLTT required)
This highlights the significant difference in tax costs when choosing between Toronto and nearby cities like Mississauga.
Key Considerations About Land Transfer Tax
- Due on Closing: Land transfer tax is a one-time payment due at closing—it cannot be included in your mortgage.
- First-Time Buyer Savings: If you qualify as a first-time buyer, you can save up to $8,475 in Toronto.
Whether you’re a first-time home buyer or purchasing your next home, understanding land transfer tax helps you budget effectively.
Be sure to check the Government of Ontario and City of Toronto websites for the latest updates and use online calculators to estimate your costs.
Looking For More Expertise?
Click the button below to Meet the Yael + Co. team.
