Toronto's Land Transfer Tax (or Beating a Dead Horse)

Rachel in Home Buying, Money, Legal

Mayor Miller’s land transfer tax (Miller’s Toronto Tax) takes effect on February 1, 2008.

I was having a conversation last night about the land transfer tax (read: was complaining, and no, I will not just get over it and move on) and I realized that my response to previous questions surrounding this issue may not have been entirely clear.  This is largely because there is some confusion as to when the tax actually becomes effective.  I have tried to outline the particulars more clearly:

If you have a closing date scheduled after February 1, 2008, you may have to pay Miller’s Toronto Tax, but you will receive a full rebate if you entered into the Agreement of Purchase and Sale before December 31, 2007. This is a little different then just not having to pay it at all. 

This is also differentiated from where you will actually fall under the line and not have to pay Miller’s Toronto Tax at all.  You are exempt from payment if you signed your Agreement of Purchase and Sale before December 31, 2007 and the transaction closes on or before February 1, 2008.

The key date to bear in mind is December 31, 2007.  If you buy your property after that date, you will be paying Miller's Toronto Tax, unless you are a first-time HomeBuyer, in which case you are granted some exemptions.  The scale that is applied to first-time HomeBuyers is reproduced below.

I have also reproduced the information contained on the City of Toronto site, which we can assume is the authority on this issue below:

For all purchasers:

• one-half of one percent of the value of the consideration on sales up to and including $55,000;
• one per cent of the value of the consideration on sales exceeding $55,000 up to and including $400,000;
• two per cent of the value of the consideration of land containing one and/or two single family residences exceeding $400,000;
• one and a half per cent of the value of the consideration on commercial properties including multi-residential units exceeding $400,000 up to $40 million;
• one per cent of the value of the consideration which exceeds $40 million.

Where the net revenue after transaction fees would result in revenue to the City of less than $2.00, the purchase would be exempt from the Toronto Land Transfer Tax.

Purchasers with a Purchase and Sale agreement on or before December 31, 2007 will receive a full rebate of the Toronto Land Transfer tax regardless of the closing date.

Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing before February 1, 2008 will not be required to pay the Toronto Land Transfer tax.

Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing on or after February 1, 2008 will be required to pay the full Toronto Land Transfer tax.

For first time purchasers:

A rebate of up to $3,725 will apply to first-time purchasers of both new and existing homes. This means a full rebate for first-time buyers of homes valued at $400,000 or less. For example, a first-time purchaser of a home valued at $600,000 would pay land transfer tax according to the scale shown above, and receive a rebate of $3,725. A first time home buyer of a home valued at $300,000 would get a full rebate on the land transfer tax.

Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law. Email Rachel

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