Toronto Land Transfer Tax 2024

How Much Are Land Transfer Taxes in Toronto?

Your Toronto land transfer tax is calculated using a marginal tax rate system, which is based on the purchase price of your home. The higher your purchase price is, the more in land transfer taxes that you will incur. Land transfer taxes start at 0.5% for the first $55,000 in purchase price, and progressively increase all the way up to a transfer tax of 2.5% for each dollar of purchase price over $2,000,000. In total, your combined provincial and municipal transfer taxes will equal double what the taxes are in Toronto, with the same transfer tax rates in Ontario.

Breakdown of Toronto Land Transfer Tax Rates

Toronto Land Transfer Tax Example ($1,000,000 Purchase Price)

When was Toronto’s Municipal Land Transfer Tax introduced?

Toronto land transfer tax was originally introduced in February 2008, after the Toronto City Council approved the tax in 2006 through an act called the City of Toronto Act. Before Toronto had a municipal land transfer tax, homebuyers in Toronto were still paying the provincial land transfer tax, which was introduced in Ontario in 1974.

The reason why Toronto put the municipal land transfer tax in place was to raise more money for the city’s budget. With home prices rising over 200% since 2008, when the tax was put in place, it has led to the city of Toronto’s revenue from this tax also skyrocketing. This has helped the city to fund more municipal projects and programs, with the transfer tax making up ~5% of the Toronto 2021 city budget.

Will you need to pay Toronto Land Transfer Tax if you are buying a condo?

Yes, condos will still incur both Toronto and Ontario land transfer taxes. Even though the land that your condo is built on is shared with other condo owners in your building, the municipality will still base your land transfer tax on your condo purchase price. Since condos in Toronto do have a lower purchase price than the average home price, you will likely have a lower land transfer tax bill purchasing a condo. For the average condo price of $674,490, the amount of Toronto land transfer tax you would owe would be $9964, and total land transfer tax including Ontario’s tax would be $19,929. Below shows how your land transfer tax will change based on the purchase price of your condo.

When is Toronto Land Transfer Tax to be paid?

Similarly to Ontario land transfer tax, Toronto’s land transfer tax is to be paid when the transaction is completed and you take possession of the property. This will be on your closing day, and it's likely your lawyer who is acting on your behalf will pay it on this day. In a normal real estate transaction, the closing date usually will come 60 to 90 days after your purchase and sale agreement offer is accepted.

When are Land Transfer Taxes due on Toronto pre-construction condos?

For those who are purchasing a Toronto pre-construction condo, your land transfer tax will be due at your closing date, similar to a normal home purchase. The main difference is when this is, with your closing date being after the city has finished their inspection, and after the building is officially registered. Usually this date will be given to your lawyer, who will inform you of it.

How can you pay Toronto’s Land Transfer Tax?

In Ontario it is mandatory to have a lawyer act on your behalf in the purchasing and mortgaging of a property, meaning you will not need to worry about how to pay the city of Toronto. What is more important for your land transfer tax bill is finding a good lawyer to operate on your behalf. The most common way your lawyer will pay this bill for you is by arranging with the city for the funds to be paid on the day you close on the house.

What are the Toronto boundaries for where municipal transfer tax is owed?

Since the city of Toronto is the only place in the GTA that will have this municipal land transfer tax, city boundaries are important. The official boundaries for Toronto include anywhere that is located south of Steeles Avenue, east of Etobicoke, which includes east of Eglinton Avenue, Etobicoke Creek, and Highway 427, west of the Pickering and Scarborough town line, and north of Lake Ontario. This means that the following regions are included in the city of Toronto:

• Toronto and East York to the south,
• Etobicoke York to the west,
• North York to the north, and
• Scarborough to the east

How has Toronto Land Transfer Tax changed over the years?

Since the start of municipal land transfer taxes in the city of Toronto in 2008, the transfer tax bracket changed last in 2017. In this revision, the land transfer tax bracket in Toronto was expanded, going from 3 land transfer tax brackets for residential properties, to 5 currently. This has also led to land transfer tax rates rising, with a new highest tax bracket of 2.5% on amounts over $2,000,000, versus the previous highest bracket of 2% on amounts over $400,000.

Although the amount of land transfer tax being charged has changed with the bracket being revised, so has the municipal transfer tax rebate for first time buyers. This maximum went from $3725 to $4475 in 2017, in order to help make up for the difference in transfer taxes from the change.

Besides just the land transfer tax brackets changing in 2017, higher home prices over the years have led to higher land transfer tax amounts being owed to the city. For example, the average home price for a detached home in Toronto in 2008 was ~$435,000. On this home, $4425 would be charged in land transfer taxes based on the pre-2017 bracket. This differs from the average detached price of $1,405,478 today, which would have $24,584 in land transfer taxes using the post-2017 tax bracket. This means that land transfer taxes on average have risen over 5x for the average single family home over the course of 13 years!

How much Land Transfer Tax is collected in the city of Toronto?

According to the latest Toronto municipal budget, the city of Toronto expects $700 million in municipal land transfer taxes in 2021. This makes up around 5% of the city's budget, with it being the 5th largest source of revenue for the city of Toronto. This makes land transfer tax an important part of the city's budget, allowing Toronto to run a balanced budget and still have some of the lowest property tax rates in Canada.

City of Toronto Revenue Sources 2021

How does Land Transfer Tax in Toronto compare to other major Canadian cities?

Since Toronto is the only major city to have a municipal land transfer tax in addition to a provincial land transfer tax, it has the highest overall land transfer tax rate in Canada. With the combination of some of Canada’s highest home prices and highest land transfer tax rates, it means that you can expect to incur a large bill compared to other cities in Canada. In the cities Edmonton and Calgary, there is virtually no land transfer tax, with the only transfer costs being registration fees. In the city of Vancouver, the property transfer tax rate gets progressively higher all the way up to 5%, however no municipal transfer tax and a larger provincial rebate for first time buyers mean it is still much lower than in Toronto. Ottawa has the same provincial transfer tax as in Toronto, however buyers will not need to pay a municipal tax, making it much less. Finally, every region of Quebec has different land transfer tax rates, and Montreal’s land transfer tax rate goes all the way up to 3% at the top end. However, with lower home values and strong first time buyer programs, Montreal will have much lower land transfer tax bills than in Toronto.

Who can you contact regarding Toronto Land Transfer Taxes?

The city of Toronto has multiple ways to get in touch with them regarding your land transfer tax. This includes by phone at the number 311 if you are in city limits, and 416-392-2489 if you are outside city limits. The location for the city of Toronto’s Revenue Services division is 5100 Yonge Street, in the North York region of Toronto. To inquire over email, you can also email torontomltt@toronto.ca for more information.

The Non-Resident Speculation Tax (NRST) is a 25% tax incurred on residential property purchases throughout Ontario. It only applies to people who are not citizens of Canada or permanent residents. The tax was increased to 20% and expanded to all of Ontario on March 30th, 2022. It was further increased to a 25% tax rate in October 2022.

The federal government has announced a two-year ban on foreign homebuyers in Canada. This ban starts January 2023 and supersedes the provincial NRST. meaning the tax will be irrelevant while the ban is implemented. However, until January 2023 when the ban starts, the NRST will remain in effect. It will also likely continue when foreign investment is welcomed in Canada again.

NRST Exemptions and Rebates

The NRST does offer exemptions in some scenarios, such as:

1. If you are a nominee under the Ontario Immigrant Nominee Program,
2. If you are a protected person at the time of purchase, or
3. If you purchase with a spouse who is a Canadian citizen, permanent resident, protected person, or nominee

Other situations where you may be eligible to receive a rebate include:

1. If you become a permanent resident within 4 years of purchasing,
2. If you are a student who has been enrolled for at least 2 years at the date of purchase at an Ontario college or university, or
3. You are a foreign national who has worked at least 1 year full-time with a valid work permit in Ontario

The Toronto First Time Home Buyer Rebate is a program that is meant to make it easier for people who do not own a home and have never purchased a home before to afford one. The way this rebate works is it will reduce the amount of land transfer tax you owe to the city of Toronto, helping to make buying a home slightly easier. The biggest reason why this program is made to help first time buyers is because they generally have a much tougher path to homeownership. First time buyers will not have equity from another home to use for a home purchase, may also not be at their prime earnings potential, and face home prices that are relatively unaffordable for most people.

Who qualifies for the Toronto First Time Home Buyers rebate?

To be eligible for the first time home buyers rebate, the buyer will need to meet the following criteria:

• Be a Canadian citizen or Canadian permanent resident,
• Be 18 years of age or older,
• Occupy the home within 9 months of purchase,
• Have never owned a home anywhere in the world, and
• If you have a spouse, they cannot have owned a home anywhere in the world while they have been your spouse

How much can the First Time Home Buyer Rebate save you?

With the Toronto first time home buyer rebate, you are able to reduce your Toronto land transfer tax by a maximum amount of $4475. This means that purchases with a purchase price below $400,000 would be land transfer tax free. Considering that the average home in Toronto is $1,062,256, it's very unlikely that this rebate will cover your entire land transfer tax budget, meaning that you should budget accordingly.

The Ontario government first time buyer rebate maximum will be slightly lower than the Toronto rebate, saving you up to $4000 in provincial transfer taxes. Since the land transfer tax rebate in Ontario covers slightly less in taxes than in Toronto, you will still be responsible for paying transfer taxes for prices over $368,333. In total however, both of these rebates will likely save you $8475 if you do qualify for them.

Besides just land transfer taxes for the city of Toronto and in Ontario, other Toronto home closing costs you can expect to incur include:

Lawyer & Legal Fees: Since it is mandatory in Ontario for a lawyer to act on your behalf when purchasing and getting a mortgage for a property, it is important to budget for this cost. This cost will likely be over $1000 for a lawyer and the other legal fees involved.

Appraisal Fees: Before you get a Toronto mortgage, your lender will require you to get a home appraisal, so they know how much to lend you. This usually will cost around $400.

Home Inspection: Although getting a home inspection is less common in Toronto’s real estate market today with bidding wars and lots of competition, this cost will be to have someone inspect the property before the sale is closed. It will usually cost around $500.

Title Insurance: This will be to protect your property and your lender from any property disputes, and will usually be around $200.

Property Survey: This is because your lawyer and lender will require an up to date certificate of the property and home. It will usually cost around $500.

Land transfer tax will only be required to be paid when you purchase a home in Toronto, however you will also have other municipal taxes. When you own a home, you must pay a yearly Toronto property tax fee to the city. This property tax fee is composed of both municipal and provincial portions, with the municipal portion going to the city for its budget, and the provincial portion going to education. In the chart below, you are able to see a breakdown of how much of your property tax bill goes to the city of Toronto, and how much goes to the province of Ontario for education.

Property Tax Rate for Toronto (2018 to 2020)

History of Toronto’s Property Tax

First introduced in 1849, Ontario property tax was created with the Municipal Act, which included the creation of property tax that municipalities must collect that would also support schools. After the 1960s, the post-war boom led to a series of reforms to the tax system, for which new elements such as exemptions under certain conditions were modified. Up to this day, Ontario’s tax system has experienced steady growth and no major changes.

Toronto itself has one of the lowest property tax rates in the province as it is more densely populated compared to other cities. The tax is calculated by multiplying the current year property-value assessment, which is done by the Municipal Property Assessment Corporation (MPAC) with the total tax rate which consists of:

• Council-approved city tax rate,
• City building fund levy rate, and
• The education tax rate as set by the Ontario government

Toronto Property Tax Payment Methods

Your Pre-Authorized Tax Payment (PTP) bill will authorize your financial institution to directly withdraw tax payments and send them to the city of Toronto before the due date. You can also mail cheques, pay through online banking, and put your payments in drop boxes at select tax offices. If your mortgage lender is paying property taxes on your behalf, they will either receive your statements directly, or you will need to forward your tax statement to their office. You will keep only the final property tax bill for your records.

Property Tax Relief Programs

Toronto offers property tax relief programs for certain groups, including:

• Low-income seniors,
• Low-income people with disabilities,
• Tax appeals for owners whose property is undergoing major construction, and
• Registered charities