Land Transfer Tax (Ontario)
Ontario land transfer tax (LTT) is a provincial tax payable by the buyer on every purchase of land or an interest in land in Ontario. The tax is calculated as a percentage of the purchase price on a graduated scale. Toronto buyers also pay a separate municipal land transfer tax. First-time buyers may qualify for a provincial refund of up to $4,000.
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Key Takeaways
- Ontario land transfer tax (LTT) is paid by the buyer at closing on all real property transfers, calculated on a graduated scale from 0.5% to 2.5% of the purchase price.
- Toronto buyers pay a second, equal municipal LTT under the City of Toronto Act, effectively doubling the land transfer tax cost compared to buyers in other Ontario cities.
- First-time buyers may claim a provincial LTT refund of up to $4,000 and a City of Toronto municipal refund of up to $4,475, subject to eligibility requirements including Canadian citizenship, age 18+, and use as principal residence.
- LTT is one of the largest closing costs in Ontario — on a $1 million Toronto purchase, combined LTT is approximately $32,950 before any first-time buyer refund.
- Certain transfers between spouses and qualifying farmland transfers may be exempt from LTT, and buyers should consult their real estate lawyer to identify any applicable exemptions.
What Is Ontario Land Transfer Tax?
Ontario land transfer tax (LTT) is a tax imposed under the Land Transfer Tax Act, R.S.O. 1990, c. L.6, on every person who acquires land or a beneficial interest in land in Ontario. 'Land' is broadly defined and includes not just real property but also fixtures, and extends to certain assignment transactions.
The tax is payable by the buyer at the time the transfer is registered or, for unregistered dispositions, when the agreement becomes binding. In practice, land transfer tax is paid at the time of closing — typically through the buyer's real estate lawyer on the day the property is registered in the buyer's name.
Land transfer tax is one of the largest closing costs in Ontario real estate transactions. On a $1 million residential purchase, the provincial LTT alone is $16,475. Toronto buyers pay an additional municipal LTT of equal amount, bringing the combined tax to $32,950. This is a significant amount that buyers must budget for in advance.
Ontario Land Transfer Tax Rates and Calculation
Ontario LTT is calculated on a graduated scale based on the purchase price (the 'value of the consideration' for the land):
| Portion of Purchase Price | Rate | |---|---| | Up to $55,000 | 0.5% | | $55,001 to $250,000 | 1.0% | | $250,001 to $400,000 | 1.5% | | $400,001 to $2,000,000 | 2.0% | | Over $2,000,000 (residential with 1-2 units only) | 2.5% |
Example calculation — $900,000 residential purchase: - 0.5% × $55,000 = $275.00 - 1.0% × ($250,000 - $55,000) = $1,950.00 - 1.5% × ($400,000 - $250,000) = $2,250.00 - 2.0% × ($900,000 - $400,000) = $10,000.00 - Total Ontario LTT = $14,475.00
For residential properties with more than two units, the 2.5% rate on amounts over $2,000,000 does not apply — the rate stays at 2.0%.
The Ontario Ministry of Finance provides an online LTT calculator at the ServiceOntario website.
Toronto Municipal Land Transfer Tax
Buyers of property within the boundaries of the City of Toronto pay a second, separate land transfer tax under the City of Toronto Act, 2006, S.O. 2006, c. 11, Schedule A. The Toronto LTT uses the same graduated rate structure as the provincial LTT.
Toronto LTT rates: | Portion of Purchase Price | Rate | |---|---| | Up to $55,000 | 0.5% | | $55,001 to $250,000 | 1.0% | | $250,001 to $400,000 | 1.5% | | $400,001 to $2,000,000 | 2.0% | | Over $2,000,000 (1-2 unit residential) | 2.5% |
For the $900,000 residential purchase example above, the Toronto buyer pays an additional $14,475 in municipal LTT, for a combined provincial + municipal LTT of $28,950.
The Toronto LTT is payable on all residential and commercial property transfers within the City of Toronto. It is one of the highest municipal real estate taxes in Canada and is a significant additional cost for Toronto homebuyers compared to buyers in other Ontario cities.
First-Time Home Buyer Refund
The Ontario government provides a land transfer tax refund for first-time home buyers under Section 6.1 of the Land Transfer Tax Act. Key requirements:
Eligibility: - The buyer must be a Canadian citizen or permanent resident of Canada - The buyer must be at least 18 years old - The buyer must occupy the home as their principal residence within nine months of the transfer date - Neither the buyer nor their spouse has ever previously owned an eligible home anywhere in the world
Maximum refund: - The refund is equal to the LTT payable, up to a maximum of $4,000 - For purchases above approximately $368,000, the full $4,000 refund is available - The refund applies to eligible homes only (generally a single-family residence, semi-detached, townhouse, or an eligible unit in a condo or cooperative)
Toronto first-time buyer refund: The City of Toronto also offers a municipal LTT refund for first-time buyers of up to $4,475 (as of 2023 — the Toronto refund uses a different maximum based on the first $400,000 of the purchase price).
Combined refund potential: A Toronto first-time buyer purchasing an eligible home priced above approximately $400,000 may receive up to $8,475 in combined provincial ($4,000) and municipal ($4,475) LTT refunds.
The refund is claimed through the electronic land registration system at the time of closing. The buyer's lawyer typically handles the refund application as part of the closing process.
Exemptions and Special Rules
Certain transactions are exempt from Ontario LTT or are subject to special rules:
Transfers between spouses: A transfer of land between spouses or former spouses, in certain circumstances, may qualify for an exemption from Ontario LTT. Specific conditions apply under Section 3 of the Land Transfer Tax Act.
Transfers to family farm corporations: Transfers of qualifying farmland to family farm corporations may be eligible for an exemption.
New home purchases: The Ontario LTT applies to new home purchases. However, new home buyers may be eligible for the HST New Home Rebate under the Excise Tax Act for the HST component of the purchase price — this is a separate rebate from the LTT refund.
Unregistered dispositions: Ontario LTT also applies to agreements that transfer a beneficial interest in land without registering a transfer — including certain trust arrangements and long-term lease agreements. The reporting obligation falls on the person acquiring the beneficial interest.
Transfers from a builder: Ontario LTT applies when a builder sells a newly constructed property. The purchase price of a new build typically includes HST, and the purchase agreement should specify whether the price is HST-inclusive or exclusive.
Commercial real estate: The LTT applies to commercial real estate purchases. There are no commercial-specific exemptions comparable to the first-time buyer refund.
Ontario Example: LTT on a Brampton Condo Purchase
Sana is a first-time buyer purchasing a condo in Brampton (not Toronto) for $680,000. She is a Canadian citizen, will live in the condo as her principal residence, and has never previously owned a home.
Ontario LTT calculation: - 0.5% × $55,000 = $275 - 1.0% × $195,000 = $1,950 - 1.5% × $150,000 = $2,250 - 2.0% × $280,000 = $5,600 - Total Ontario LTT = $10,075
First-time buyer refund: $4,000 (maximum)
Net Ontario LTT payable: $10,075 - $4,000 = $6,075
Because Sana is buying in Brampton (not Toronto), no municipal LTT applies. If she were buying the same condo in Toronto, she would also pay approximately $10,075 in Toronto LTT, reduced by a municipal first-time buyer refund of up to $4,475.
Sana's lawyer processes the first-time buyer refund claim at closing. Sana must ensure she occupies the unit as her principal residence within nine months of the transfer date to maintain eligibility.
Frequently Asked Questions
When is Ontario land transfer tax payable?+
Ontario land transfer tax is payable at the time of closing — when the transfer of the property is registered in the buyer's name through the provincial land registry. In practice, the buyer's real estate lawyer calculates the LTT, pays it electronically as part of the closing process, and reflects it in the buyer's statement of adjustments.
Do I pay land transfer tax on a new construction purchase?+
Yes. Ontario land transfer tax applies to purchases of new construction homes from builders. The tax is calculated on the purchase price (or the fair market value if the actual price is not arm's length). New build buyers should also be aware of HST implications — newly constructed residential properties are subject to HST, though the HST New Home Rebate may reduce the net amount payable.
Is land transfer tax paid by the buyer or seller in Ontario?+
Land transfer tax is paid by the buyer, not the seller. It is calculated on the purchase price of the property and is payable at the time the transfer is registered. It is one of the largest closing costs a buyer incurs and must be budgeted for in advance.
Can I claim the first-time buyer LTT refund if my spouse has previously owned a home?+
No. The eligibility requirement is that neither the buyer nor their spouse (at the time of the purchase) has previously owned a home anywhere in the world. If your spouse owned a home prior to your marriage or relationship but no longer does, you may not qualify. Ontario's definition of 'spouse' includes married and common-law spouses.
Does Ontario land transfer tax apply to commercial property?+
Yes. Ontario LTT applies to transfers of all land in Ontario — residential and commercial. There is no commercial exemption comparable to the first-time buyer refund. Commercial buyers pay the same graduated rate schedule as residential buyers, without the 2.5% rate that applies to the portion of the purchase price over $2 million for 1-2 unit residential properties.
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