Real Estate Law
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Ontario land transfer tax is charged on most transfers of land, at marginal rates from 0.5% to 2.0% of the value of the consideration, plus an extra 0.5% above $2 million for homes with one or two single-family residences. Qualifying first-time buyers may receive a provincial refund of up to $4,000, buyers in Toronto also pay a municipal land transfer tax, and some foreign buyers pay a 25% Non-Resident Speculation Tax.
Key points
Whether you are buying your first condominium, moving to a larger home, or transferring property within a family, land transfer tax can be a significant cost. This guide explains how the provincial tax is calculated, who qualifies for the first-time buyer refund, how Toronto’s tax and the NRST fit in, and the deadlines that matter.
Table of contents
Ontario land transfer tax is a provincial tax charged when an interest in land is transferred. It is imposed by the Land Transfer Tax Act, RSO 1990, c L.6 (the “Act”). Under section 2(1), the person who tenders a conveyance for registration must pay the tax when, or before, the conveyance is tendered for registration. In a typical home purchase, that means the buyer pays it on closing, through the lawyer who registers the transfer.
The tax also reaches some transfers that are never registered. For example, section 3 of the Act deals with “dispositions” of a beneficial interest in land, such as certain trust arrangements. Toronto adds a separate municipal tax on top of the provincial tax, discussed below.
The provincial tax is calculated on the “value of the consideration” using marginal rates set out in section 2(1) of the Act for conveyances tendered on or after January 1, 2017:
| Portion of the value of the consideration | Rate |
|---|---|
| Up to and including $55,000 | 0.5% |
| Over $55,000 up to and including $250,000 | 1.0% |
| Over $250,000 up to and including $400,000 | 1.5% |
| Over $400,000 | 2.0% |
| Over $2,000,000, where the land contains at least one and not more than two single-family residences | Additional 0.5% (2.5% in total on that portion) |
Each rate applies only to the slice of the price that falls within its band. The extra 0.5% above $2 million applies only to land with one or two single-family residences, not to other types of property.
The tax is not always based only on the price written in the agreement. Section 1(1) of the Act defines “value of the consideration” to include the gross sale price, the value of any liability the buyer assumes (such as an existing mortgage), and the value of any benefit of whatever kind the buyer confers as part of the arrangement relating to the conveyance.
Ontario courts have applied this broad definition:
These decisions involved commercial transactions, but the principle is general: assumed debts and related benefits can increase the tax, so the full deal should be reviewed before closing.
The examples below apply the provincial rates only. They do not include Toronto’s municipal tax, any refund, or other closing costs.
A first-time buyer who qualifies for the provincial refund could reduce the provincial amount by up to $4,000. On the $800,000 example, that would bring the provincial tax down to $8,475.
Section 9.2 of the Act allows the Minister to refund tax paid by a qualifying first-time purchaser of an eligible home. For a home conveyed on or after January 1, 2017, the maximum refund is $4,000 (s. 9.2(2.1)(b)). Where the agreement of purchase and sale was entered into after November 14, 2016, the purchaser must:
The purchaser must occupy the home as a principal residence no later than nine months after the conveyance (s. 9.2(2)), and the refund application must be made within 18 months after the conveyance (s. 9.2(5)). A buyer who meets the other conditions but is not yet a citizen or permanent resident on closing may still qualify if that status is obtained within 18 months afterward (s. 9.2(2.0.1)). The refund is often claimed at registration through the electronic land registration system; otherwise, an application can be made to the Ministry of Finance. The province explains the process on its first-time homebuyer refund page.
Buyers of property in the City of Toronto pay a municipal land transfer tax in addition to the provincial tax. Section 267 of the City of Toronto Act, 2006, SO 2006, c 11, allows the City to impose a direct tax by by-law, and requires the by-law to state the tax rate and the manner of collection. The by-law may also provide for exemptions and rebates.
Toronto’s rates and its first-time buyer rebate are therefore set by the City’s municipal code, and they have been changed over time. Because these figures can change, check the current schedule on the City of Toronto municipal land transfer tax page before budgeting, and ask the lawyer handling your purchase to confirm the amount for your transaction. In practice, a Toronto purchase can carry close to double the land transfer tax of a similar purchase elsewhere in Ontario.
The Non-Resident Speculation Tax is an additional tax under the Act on conveyances of certain residential land to a “foreign entity” or a “taxable trustee.” The Act states a 15% rate unless an alternate rate is prescribed. Ontario Regulation 182/17 prescribes a 25% rate for conveyances tendered for registration after October 24, 2022 (s. 1.3(1)), and extends the tax to land across Ontario, subject to transition rules (s. 1.2).
The regulation contains conditional exemptions and rebates, not a blanket exemption for newcomers. They include routes for certain provincial nominees, protected persons, and a foreign national buying with a spouse who is a Canadian citizen, permanent resident, nominee or protected person, each with occupancy and other conditions. A foreign national who becomes a permanent resident within four years and meets the principal-residence conditions may apply for a rebate within the regulation’s deadlines (s. 5). Newcomers should get advice on their immigration status and the NRST before signing an agreement of purchase and sale. The province summarises the rules on its NRST page.
Many people assume that transfers within a family are always tax-free. Ontario’s rules are narrower:
If a transfer is part of a separation, an estate or a family arrangement, get advice before registering it. Our article on adding a child to a property title explains related tax and estate issues.
The provincial tax is payable when, or before, the conveyance is tendered for registration (s. 2(1)). For electronic registration, the required tax statements are included in the electronic transfer (s. 5(1.1)). Registration without payment is permitted only in limited cases, such as where the Minister is satisfied no tax is payable or acceptable security has been provided (s. 2(9)).
Paying less than the tax owing can lead to a penalty equal to 5% of the shortfall (s. 7.1(2)), with a separate penalty where fraud or wilful default is involved. Interest also accrues on unpaid amounts at the prescribed rate, compounded daily (s. 17). The Ministry generally has four years to reassess, with exceptions for misrepresentation, fraud or failure to file a required return (s. 12(4)).
Two different deadlines are easy to confuse:
NRST rebates have their own conditions and deadlines under Ontario Regulation 182/17. Missing a deadline can mean losing the refund, so keep your closing documents and diarise the dates.
Buying in British Columbia instead? See our guide to BC property transfer tax and our BC real estate and conveyancing services.
The provincial tax is calculated on the value of the consideration using marginal rates: 0.5% up to $55,000, 1% from $55,000 to $250,000, 1.5% from $250,000 to $400,000 and 2% above $400,000, with an extra 0.5% above $2 million for land with one or two single-family residences (Land Transfer Tax Act, s. 2(1)).
The Act places the obligation on the person who tenders the conveyance for registration. In an ordinary purchase, the buyer pays it on closing through their lawyer.
It is payable when, or before, the transfer is tendered for registration, so it is paid on the closing date as part of the closing funds.
For homes conveyed on or after January 1, 2017, the maximum provincial refund is $4,000 (s. 9.2(2.1)(b)).
Generally, an individual who is at least 18, is a Canadian citizen or permanent resident, has never owned an eligible home anywhere in the world, and whose spouse has not owned one while they were spouses. The home must be occupied as a principal residence within nine months.
Possibly. A buyer who meets the other conditions may still qualify if they become a citizen or permanent resident within 18 months after the conveyance (s. 9.2(2.0.1)).
The application must be made within 18 months after the conveyance (s. 9.2(5)).
Yes. Buyers of property in the City of Toronto pay the municipal land transfer tax in addition to the provincial tax. Toronto sets its own rates and first-time buyer rebate by by-law.
For conveyances tendered for registration after October 24, 2022, the prescribed rate is 25%, and the tax applies across Ontario, subject to transition rules and conditional exemptions (Ontario Regulation 182/17).
Not automatically. Some specific exemptions may apply depending on the circumstances, but there is no general exemption for every transfer between spouses. Get advice before registering the transfer.
It can. The value of the consideration includes the value of any liability the buyer assumes as part of the arrangement (s. 1(1)).
If tax was paid that was not payable, a refund application must generally be made within four years after the payment (s. 8(1)).
If you have questions about land transfer tax in a property purchase, a separation, an estate or a family transfer, Pax Law Corporation can review your situation and explain your options. Pax Law Corporation is a general practice with offices in North Vancouver and Toronto, and you can book a consultation with either office.
You can also learn about the services of our Toronto office.
Disclaimer: This article is general information only and is not legal or tax advice. Land transfer tax rules, rates and rebates can change, and the right answer depends on the facts of each transaction. Please speak with a lawyer about your own situation before you act.
This article is for general information only and is not legal advice. The law can change and every case is different. Reading it does not create a lawyer–client relationship. For advice about your own situation, please book a consultation with a lawyer.
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