PURCHASING A HOME IS ALWAYS A MEANINGFUL AND SIGNIFICANT EXPERIENCE FOR FIRST-TIME HOMEBUYERS. STILL, SOMETIMES THE EXCITEMENT THAT SURROUNDS A HOMEBUYER’S TRANSACTION CLOUDS THE REALITIES OF SOME OF THE UNEXPECTED COSTS ASSOCIATED WITH PURCHASING A RESIDENTIAL PROPERTY FOR THE FIRST TIME. ONE OF THESE UNEXPECTED COSTS IS THE DREADED LAND TRANSFER TAX (LLT).
LTT is often overlooked when considering the total cost of purchasing a home. Whenever you acquire land or a beneficial interest in land, you pay LTT to the province when the transaction closes. LTT usually is based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land. Homebuyers in Toronto also incur an additional municipal tax in conjunction with LTT.
To help offset the cost, Ontario, British Columbia, Prince Edward Island, and the City of Toronto offer land transfer tax rebates for first-time homebuyers, where the maximum amount of the refund is $4,000.
To claim a refund, you must be at least 18 years of age, you cannot have owned a home or an interest in a home anywhere in the world, and your spouse cannot have owned a home or interest in a home, anywhere in the world while they were your spouse. Previous ownership in a home means you do not qualify for the land transfer tax first-time homebuyer’s refund. The method of acquiring the home (e.g., purchase, gift or through an inheritance) is not relevant. Additionally, the refund will be reduced if one (or more) of the purchasers is not a first-time homebuyer. The refund will be proportionate to the interest acquired by the individuals who qualify for the refund.
As a first-time homebuyer, it is essential to factor these costs into your total budget when purchasing a property. For more information on LTT and how much this may cost you when buying your first home, please submit a request for a detailed, personalized quote directly through our website.