Buyers Were Asking: Land Transfer Tax Vs. First Time Buyers

Land Transfer Tax Vs. First Time Buyers


If you’ve bought and sold homes in your lifetime, you’re likely familiar with that little (or not so!) added fee the lawyers refer to as Land Transfer Tax.  If you’re not familiar, let’s think of it as a transaction fee.  In the case of buying real estate, the fee applies when land is being transferred from one person, people, company etc. to another, on closing day.  


Who foots the bill?  Well, as the buyer, you do!  But, there’s some good news!  As first time home buyers in Ontario, we’re given a break (Thank You!!).  It used to be that, real estate closings prior to January 2017 received a rebate up to a maximum of $2,000.  Since then, buyers who qualify as first timers reap the benefits of a $4,000 rebate on their land transfer tax.  

What does this mean for you?  If you’re purchasing a home valued at $368,000 or less, you won’t pay a cent in land transfer tax because your rebate will cover the full amount owing.  Going over and above that simply means you’ll calculate your land transfer taxes on your total purchase price, less the $4,000 rebate… you cover the difference.

There are times where one party to the transaction (Mom, Dad, Spouse, etc) may not qualify as a first time home buyer, and the other party does.  In this case, the rebate will be reduced according to each party’s interest in the property.  If you’re entering the transaction 50/50, you’ll receive half the rebate, at $2,000…. and so on. 

You might be wondering how this is taken care of.  Rest assured, though you do have 18 months from the transaction date to apply… you won’t have to do a thing!  Your lawyer will apply for the rebate on your behalf, that way, you’re not putting out the money upon closing. You’ll see it come right off the Land Transfer Tax line on the invoice from your lawyer. 

If you’ve questions, or, something’s unclear… ask us! Your lawyer! Or check out all the detail at https://www.fin.gov.on.ca/en/bulletins/ltt/1_2008.html.