Trish & Cheryl Niagara on the Lake RealtyNiagara-on-the-Lake Realty

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Land Transfer Tax

(Article from the Ministry of Finance website)

 

 January 18, 2017

Land Transfer taxWhen you buy land or an interest in land in Ontario, you pay Ontario's land transfer tax. Land includes any buildings, buildings to be constructed, and fixtures (such as light fixtures, built-in appliances and cabinetry).

**NEW AS OF JANUARY 1, 2017-Ontario's first-time home buyers are eligible to receive a $4000.00 land transfer tax rebate, an increase of $2,000.00!

 

 

 

 

Who pays land transfer tax?

 

When you acquire a property or land, you pay land transfer tax to the province when the transaction closes.

Land transfer tax is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.

In some cases, land transfer tax is based on the fair market value of the land, for example, where:

  • the transfer of a lease with a remaining term that can exceed 50 years
  • the transfer of land is from a corporation to one of its shareholders, or
  • the transfer of land is to a corporation, if shares of the corporation are issued.

 

First-time homebuyers

 

If you are a first-time homebuyer, you may be eligible for a refund of all or part of the land transfer tax.

 

Other land taxes


Local municipalities charge a tax on the residential or business property you own. If you have questions about municipal property tax, contact your local municipality. If your property is located in an unorganized territory (an area without municipal organization) of Ontario, property tax is collected through the provincial land tax program administered by the Provincial Land Tax Office in Thunder Bay.

 

Harmonized sales tax

 

The harmonized sales tax (HST) applies to newly constructed homes or substantially renovated homes, but does not apply to resale homes. Buyers of new homes may receive a rebate of up to $24,000 of the provincial portion (8%) of the HST. If you have any questions about the HST rebate please contact the Canada Revenue Agency at 1 800 959-1953.

 

Land transfer tax rates

 

The tax rates calculated on the value of the consideration are:

  • 0.5% up to and including $55,000
  • 1% above $55,000 up to and including $250,000
  • 1.5% above $250,000
  • 2% above $400,000 where the land contains one or two single family residences.

The land transfer tax rate is the same for residents and non-residents of Canada.

 

Calculating the tax amount

 

Use the table below to calculate land transfer tax.

  • Residential property: land that contains one or two single family residences
  • VC: Value of the consideration for the conveyance or disposition
  • LTT: Land transfer tax payable

For the Value of the Consideration

Formula

up to and including $55,000

LTT = VC × 0.005

above $55,000 and up to $250,000

LTT = (VC × 0.01) - $275

above $250,000, for property other than residential

LTT = (VC × 0.015) - $1,525

above $250,000 up to $400,000, for residential property

LTT = (VC × 0.015) - $1,525

for residential property above $400,000

LTT = (VC × 0.02) - $3,525

 

Vacant lot with a construction contract

 

Where a construction contract is entered into as part of the arrangement relating to the purchase of a vacant lot or lots, the value of the consideration is calculated on the:

  • total cost of the lot, plus
  • cost of construction contract,

 

Value of consideration in foreign currency

 

All monies must be expressed in Canadian dollars. The land transfer tax statements must set out the value of the consideration in Canadian dollars. The date of currency conversion should be the:

  • date that the agreement of purchase and sale is accepted and becomes a binding contract, or
  • date of registration if there is  no written agreement.

 

Paying the tax

 

Ontario's land transfer tax is payable when the transfer is registered.

If the transfer is not registered within 30 days of closing, you must submit a Return on the Acquisition of a Beneficial Interest in Land form to the Ministry of Finance, along with the payment of tax within 30 days after the closing date.

 

Some person(s) do not pay land transfer tax on certain transfers of land. The exemptions include:

  • certain transfers between spouses
  • certain transfers from an individual to his or her family business corporation
  • certain transfers of farmed land between family members
  • certain transfers of a life lease from a non-profit organization or a charity.

A deferral of land transfer tax may be available when land is transferred between affiliated corporations, and notice of the transfer is not registered on title.

 

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