Land transfer tax, a payment made to the government for transferring property from the seller to the buyer, is a complex process that should be calculated by a professional. Land transfer taxes may vary depending on the region, you will want to take advantage of your REALTOR®‘s expertise to find out this tax may affect your home purchase. Land transfer tax is typically calculated on the value of the property as registered with the land registration office. The fees are calculated between 0.5 – 2% of the property’s total value. Generally, 1% applies to the first $200,000, and 2% to the remainder. As with most taxes, there are some exceptions.
Since 2005, first-time home buyers are credited up to $2,000.00 of this tax, provided they meet certain criteria. Individuals must be Canadian citizens who have never owned a home anywhere else in the world. They must have been living in the province for at least one year prior to the purchase and have filed at least two Canadian tax returns within the past six years. Finally, they must occupy their new home for at least the first year of ownership.
As of December, 2007, land transfer tax credit was applied to not only to resale homes, but to newly constructed homes as well. For the credit on vacant lot purchases, a house must be constructed within one year of closing and the owner must live in that house for the remainder of the year.
For more information please visit : http://www.fin.gov.on.ca/en/refund/newhome
If you have additional questions about land transfer tax, how it is calculated and whether or not you meet tax exemption criteria, you should consult your REALTOR®.