Land Transfer Tax (Ontario & Toronto)
Ontario's land transfer tax (LTT) is a provincial tax buyers pay on closing, calculated on a sliding scale against the purchase price. Buy inside the City of Toronto and a second, municipal land transfer tax applies on top — roughly doubling the bill. First-time buyers can claim rebates of up to $4,000 (Ontario) and $4,475 (Toronto).
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Key Takeaways
- Budget LTT as a cash closing cost: about $16,475 provincial on a $1M purchase — and roughly double that inside Toronto city limits.
- First-time buyer rebates are worth up to $4,000 (Ontario) plus $4,475 (Toronto), with strict worldwide never-owned rules — including your spouse's history.
- The tax is due in cash on closing; it cannot be added to your mortgage.
- Assignments, new construction, and non-resident status all change the LTT math — confirm before you sign, not at closing.
How the Tax Is Calculated
Ontario LTT applies marginal rates to bands of the purchase price:
0.5% on the first $55,000 1.0% from $55,000 to $250,000 1.5% from $250,000 to $400,000 2.0% from $400,000 to $2,000,000 2.5% above $2,000,000 (for homes with one or two single-family residences)
Worked example — a $1,000,000 purchase anywhere in Ontario: $275 + $1,950 + $2,250 + $12,000 = $16,475 of provincial LTT.
Buy that same home inside the City of Toronto and the municipal land transfer tax (MLTT) applies the same band structure again (with additional luxury tiers above $3M), bringing the combined bill to roughly $32,950. Crossing Steeles Avenue is, among other things, a five-figure tax decision.
First-Time Buyer Rebates
Ontario refunds up to $4,000 of provincial LTT for qualifying first-time buyers — which fully covers the tax on purchases up to $368,333 and reduces it above that. Toronto's MLTT has its own first-time buyer rebate of up to $4,475. A first-time buyer purchasing in Toronto can therefore save up to $8,475 combined.
Qualifying rules are stricter than people assume:
- You must never have owned a home (or an interest in one) anywhere in the world, at any time.
- Your spouse must not have owned a home while being your spouse (a spouse's pre-relationship ownership can disqualify your rebate share).
- You must occupy the home as your principal residence within 9 months of closing.
- You must be at least 18 and a Canadian citizen or permanent resident (or become one within 18 months).
Your real estate lawyer claims the rebate electronically at closing — it's a checkbox in the registration process when done right, and a painful refund application when missed.
Special Situations That Catch Buyers
New construction: LTT is generally calculated on the price including certain adjustments; your lawyer reconciles the builder's statement of adjustments. Budget LTT on pre-construction purchases for final closing, not occupancy.
Assignments: the assignee (final buyer) pays LTT on the full price they're effectively paying — original contract price plus the assignment amount — not the original contract price alone.
Non-resident buyers: Ontario's Non-Resident Speculation Tax (NRST) adds 25% province-wide for foreign nationals buying residential property, and a separate federal purchase prohibition has applied to many non-resident purchases in recent years. Newcomer clients should get legal advice on their specific status before offering.
Gifts and family transfers: transfers between spouses and certain family arrangements can be exempt or taxed on the mortgage assumed rather than the value — a lawyer's question, but worth flagging early.
Frequently Asked Questions
Can I add land transfer tax to my mortgage?+
No. LTT is paid through your lawyer on closing day from your cash. On a $1M Toronto purchase, that means finding roughly $33,000 beyond your down payment — the single most under-budgeted closing cost we see.
I owned a home overseas years ago. Do I still qualify as a first-time buyer?+
For LTT rebate purposes, no — prior ownership anywhere in the world disqualifies you. Note the definition differs across programs: the rules for the federal Home Buyers' Plan and the FHSA are different from the LTT rebate, so you can qualify for one and not another.
Does the seller pay any land transfer tax?+
No — in Ontario the buyer pays LTT. Sellers pay their own closing costs (commission, legal fees, mortgage discharge) but not transfer tax.
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