“In this world nothing is certain but death and taxes.”
Ben Franklin knew that inevitability back in the 18th century. You didn’t really think you were going to get away purchasing something as valuable as a house without taxes grabbing a little of the action, did you? Of course not. The only question is how much they’re going to take.
The good news is that resale homes are exempt from the federal Goods and Services Tax (GST) (you’ll have to pay GST if you’re buying a new house, though). And then there is the Land Transfer Tax (LTT).
Purchasers of Canadian real estate in most of the country can add LTT to their list of closing costs. Unless you live in Alberta, Saskatchewan or rural Nova Scotia, Land Transfer Taxes (also called Property Purchase Tax or PPT) are a fact of life.
(And if you do happen to live in an area where an LTT isn’t collected, well, what was it again that old Ben said about inevitability and such? That’s right. Once you’re a homeowner, there will be property taxes, municipal taxes and the sundry other taxes and fees that go with ownership).
WHAT ARE LAND TRANSFER TAXES?
Land Transfer Taxes are provincial taxes levied on real estate changing hands, and are the responsibility of the purchaser. Depending on where you buy a house, the taxes can range from 0.5% to 2% of the total value of the property.
Many provinces have multi-tiered taxation systems, which can be a little complicated. If you purchase a property for $260,000 in Ontario, for example, 0.5% is charged on the first $55,000; 1% is charged on $55,000 to $250,000, and 1.5% is charged on $250,000 to $400,000.
Visit Mortgage Calculators to estimate the land transfer tax for your new house using the Land Transfer Tax Calculator.
Ontario Land Transfer Tax
- Up to $55,000 X 0.5% of total property value
- From $55,000 to $250,000 X 1% of total property value
- From $250,000 to $400,000 X 1.5% of total property value
- From $400,000 up X 2% of total property value
- The City of Toronto levies an additional LTT on Toronto real estate in addition to the provincial rate.
Courtesy of: http://www.royallepage.ca/en/realestateguide/buying/closing/land-transfer-tax.aspx