Some of the exceptions are as follows:
- If a single first-time purchaser is buying a new home from a registered builder, the first $2,000 in the provincial Land Transfer tax is waived. If the spouse of a first time home buyer owns property, he or she must have disposed of the previously owned property before becoming the spouse of the first time home buyer.
- Other exemptions under the Land Transfer Tax Act include transfers involving trusts, transfers to a charity or transfers to a government organization.
- Land Transfer Tax is also not payable when the property being transferred is a gift and there is no consideration between the parties.
- However, the assumption of an existing mortgage by the person acquiring the property or accepting a personal loan from the person selling the property would be subject to the Land Transfer Tax.
In Ontario, the land transfer tax is based on a sliding scale:
- 5% of the value of the property up to and including $55,000;
- 1% of the value which exceeds $55,000 up to and including $250,000;
- 5% of the value which exceeds $250,000; and
- 2% of the amount by which the value of the consideration exceeds $400,000 for property that contains at least one and not more than two single family residences.
The tax is calculated on the value of the consideration for the transfer. In certain cases the Land Transfer Act deems the value of the consideration to be the fair market value of the land.
In certain circumstances tax is payable even when there is no actual transfer of the property: transfer of shares, an Agreement of Sale or Assignment thereof.
Only the buyer is required to pay the LTT and not the seller. The purchaser’s lawyer pays such tax on behalf of the purchaser on the closing date. The purchaser will be required to provide their lawyer with certified closing funds that will cover the closing expenses.
At Mackesy Smye our experienced real estate lawyers can help you with all your queries on property purchase or transfers and provide you with the best representation possible in disputes regarding Land Transfer Tax.