Monday, December 8, 2008

Ontario Land Transfer Tax

Here's a little information on one of those two inevitable parts of life (death and taxes). For your jurisdiction, make sure you check the appropriate references. This information is specific to transactions in Ontario, Canada.

If you buy land or an interest in land you must pay the Ontario Land Transfer Tax (OLTT). You should check that link for more specific information but we've included some answers to the more frequently asked questions in this post to get you by until you check with a professional such as a real estate lawyer to confirm how and whether the tax applies in your specific situation. There are certain exemptions available and again we always suggest you check with a qualified professional before making any moves.

The amount of the OLTT can be significant and is calculated using a progressive scale based on the purchase price of the property:
  • 0.5% on amounts up to and including $55,000
  • + 1.0% on amounts exceeding $55,000 up to and including $250,000
  • + 1.5% on amounts exceeding $250,000 up to and including $400,000
  • + 2.0% of the amount in excess of $400,000 (residential only)
So as you can see, the amount of tax payable is a key consideration to be included when budgeting for the purchase of a home. This is even more important if that home happens to be in the City of Toronto because there is also a Municipal Land Transfer Tax which applies on all purchases of homes within the city.

In general we note that the scale of rates and exemptions are similar between the two tiers. Our best advice is to seek the opinion of an expert BEFORE signing on the dotted line so that you are sure of your budget requirements and aren't in for any surprises.

If you are interested in contacting a real estate lawyer we suggest you contact the Law Society of Upper Canada which operates a referral service for a small charge or use a service such as CanLaw.

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