Buying in Toronto and wondering why your closing costs jump by thousands right at the finish line? You are not alone. Toronto buyers pay both the Ontario Land Transfer Tax and a second, City of Toronto Municipal Land Transfer Tax, which can be one of the largest line items at closing. In this guide, you will learn exactly how these taxes are calculated, what first-time buyer refunds can cover, and how to budget with confidence. Let’s dive in.
Land transfer tax basics
Buying in Toronto triggers two separate taxes that stack on the same purchase:
- The Ontario Land Transfer Tax (provincial LTT).
- The Toronto Municipal Land Transfer Tax (MLTT).
You pay these taxes at closing when the property is registered. Your lawyer typically calculates and remits them, and files the required returns. The taxes are buyer obligations. Sellers do not pay land transfer taxes unless a private agreement says otherwise.
How the taxes are calculated
Both the provincial LTT and Toronto’s MLTT use the same tiered rate structure. Each tax is calculated on portions of your purchase price that fall within specific brackets. In Toronto, you calculate the provincial tax and then calculate the municipal tax the same way. The two amounts are added together.
A quick shortcut is to calculate the provincial LTT and then double it to estimate the combined LTT + MLTT, before any refunds.
Ontario LTT rate tiers
- 0.50% on the first $55,000
- 1.00% on the portion from $55,000 to $250,000
- 1.50% on the portion from $250,000 to $400,000
- 2.00% on the portion above $400,000
Toronto MLTT mirrors provincial LTT
Toronto’s MLTT uses the same tiers and rates. That means combined marginal rates effectively double across the brackets:
- 1.00% on the first $55,000
- 2.00% on $55,000–$250,000
- 3.00% on $250,000–$400,000
- 4.00% on the portion above $400,000
These are marginal rates applied to each tier, not a flat rate on the whole price.
Worked examples for Toronto buyers
Below are clear, step-by-step calculations so you can see how the numbers build and what first-time buyer refunds might do to the total. Refunds reduce the tax payable but cannot exceed the tax due in that jurisdiction.
$650,000 condo in Toronto
Provincial LTT calculation:
- 0.5% × $55,000 = $275
- 1.0% × ($250,000 − $55,000 = $195,000) = $1,950
- 1.5% × ($400,000 − $250,000 = $150,000) = $2,250
- 2.0% × ($650,000 − $400,000 = $250,000) = $5,000
- Provincial LTT = $275 + $1,950 + $2,250 + $5,000 = $9,475
Toronto MLTT is calculated the same way, so MLTT = $9,475.
- Combined LTT + MLTT = $9,475 × 2 = $18,950
First-time homebuyer refund illustration:
- If you qualify for both the provincial and municipal first-time refunds, you could subtract up to $4,000 from the provincial portion and up to $4,475 from the municipal portion, subject to eligibility and caps. That would reduce a combined $18,950 to about $10,475.
As a share of the purchase price, the combined tax is about 2.91% before refunds.
$1,200,000 freehold house in Toronto
Provincial LTT calculation:
- 0.5% × $55,000 = $275
- 1.0% × $195,000 = $1,950
- 1.5% × $150,000 = $2,250
- 2.0% × ($1,200,000 − $400,000 = $800,000) = $16,000
- Provincial LTT = $20,475
Toronto MLTT is also $20,475.
- Combined LTT + MLTT = $40,950
First-time homebuyer refund illustration:
- With maximum provincial and municipal first-time refunds applied, total tax could drop by about $8,475, to roughly $32,475, subject to eligibility and the cap in each jurisdiction.
As a share of the purchase price, the combined tax is about 3.41% before refunds.
Lower price point snapshots
- $500,000 purchase → combined LTT ≈ $12,950 (about 2.59% of price).
- $350,000 purchase → combined LTT ≈ $7,450; for eligible first-time buyers, the combined refunds could fully offset this amount because refunds cannot exceed the tax payable.
First-time buyer refunds: what to know
Both Ontario and the City of Toronto offer first-time homebuyer refunds that reduce your land transfer taxes. Each has its own eligibility rules and maximum refund amount. The refund in each jurisdiction cannot be greater than the tax you owe to that jurisdiction.
Common eligibility factors include first-time buyer status, residency or citizenship criteria, and the requirement that you intend to occupy the home as your principal residence. Only one refund generally applies per person or family. Your lawyer typically applies the refunds at closing, provided you supply the required information and documents.
Budgeting for closing costs in Toronto
Land transfer tax is often the largest closing cost line item for Toronto buyers. A practical rule of thumb is to budget combined LTT + MLTT in the range of about 2.0% to 4.0% of your purchase price for typical Toronto homes, before refunds.
- Many condo buyers will see combined LTT around 2.5% to 3.2% of price.
- Many freehold buyers will see combined LTT around 3.0% to 3.7% of price.
In addition to LTT/MLTT, plan for:
- Legal fees, title insurance, and land registration fees.
- Any HST considerations. HST generally applies to new homes, while resale residential properties are usually exempt, but there are nuances.
- A small buffer for closing adjustments and incidentals.
Financing note: Lenders typically do not include land transfer taxes in the mortgage principal. Expect to bring closing funds that cover your down payment plus LTT/MLTT and other closing costs. Confirm details with your lender.
Smart next steps
- Run exact numbers using the official Ontario and City of Toronto land transfer tax calculators to see your specific tax at your target price.
- Confirm first-time buyer eligibility with your lawyer early so refunds are applied correctly at closing.
- Align with your lender on how much cash you will need at closing and whether any options exist to manage closing costs.
- Build LTT/MLTT into your budget and offer strategy so there are no surprises on closing day.
If you want a clear plan for your purchase and a precise closing cost estimate aligned to your price point and timeline, our team is here to help. Reach out to SHAHD KHAWAJA REAL ESTATE INC BROKERAGE for tailored guidance on budgeting, neighborhoods, and purchase strategies in Toronto and across the western GTA.
FAQs
How do Toronto LTT and MLTT work together?
- Toronto buyers pay both the provincial LTT and the City of Toronto MLTT, calculated separately using the same tiered rates and added together at closing.
Do condos and freeholds pay different land transfer tax?
- No. The calculation method is the same for condos and freeholds; only the purchase price determines the tax.
Can I add land transfer tax to my mortgage in Toronto?
- Generally no. Expect to pay LTT and MLTT from your closing funds, and confirm any exceptions directly with your lender.
Who calculates and pays these taxes at closing?
- Your conveyancing lawyer typically calculates the amounts, files the returns, and remits the taxes on your behalf at closing.
Do sellers ever pay land transfer taxes in Toronto?
- No. Land transfer taxes are buyer obligations unless a private agreement specifically states otherwise.
Are land transfer taxes tax-deductible in Canada?
- No. Land transfer taxes on personal residential purchases are not deductible for income tax purposes.
What if I am a non-resident or foreign buyer?
- Additional taxes or surtaxes have been applied in some periods and areas; these rules change over time, so confirm current requirements with official sources or legal counsel before you buy.
