Buying a home in Toronto? Then you should plan for two land transfer taxes at closing. It can feel confusing when you are juggling deposits, mortgage funds, and closing costs. The good news is you can estimate these taxes in minutes and see how first-time buyer refunds might reduce what you owe. This guide breaks it down in plain language so you can budget with confidence. Let’s dive in.
What land transfer tax is in Toronto
In Toronto you pay two separate land transfer taxes at closing:
- The Ontario provincial Land Transfer Tax.
- The City of Toronto municipal Land Transfer Tax.
The municipal tax mirrors the provincial brackets and percentages. In practice you pay both, which means your total is essentially the provincial amount doubled, then adjusted for any refunds you qualify for. Your lawyer collects and remits these taxes on closing day.
There may be other separate charges in some cases, such as a non-resident speculation surcharge. These are different from land transfer tax and can add to your total if they apply to your situation.
Toronto rates at a glance
Ontario calculates land transfer tax using price brackets. Toronto uses the same brackets and rates, so the combined marginal rates in the city are simply doubled:
- 1.0% on the first $55,000
- 2.0% on the portion from $55,000.01 to $250,000
- 3.0% on the portion from $250,000.01 to $400,000
- 4.0% on the portion from $400,000.01 to $2,000,000
- 5.0% on the portion above $2,000,000
These rates reflect the schedules commonly in effect as of mid 2024. Always confirm current figures with your lawyer before you close.
How the tax is calculated
Land transfer tax is based on the “consideration” for the transfer, usually the purchase price. It uses a marginal system, which means each part of your price is taxed at the rate for that bracket. You total the amounts from each bracket to get your provincial tax. Then, for Toronto, you either calculate the municipal tax the same way or simply double the provincial amount for a quick combined total.
If you qualify as a first-time homebuyer, you can reduce both the provincial and municipal portions with separate refunds. You will subtract the provincial refund from the provincial tax and the municipal refund from the municipal tax.
A simple step-by-step you can use
Follow this quick method for a fast estimate:
- Calculate the provincial LTT by brackets.
- Double that number to estimate total LTT in Toronto.
- If you are a first-time buyer, subtract the provincial refund (up to $4,000) from the provincial portion and the municipal refund (up to $4,475) from the municipal portion.
- Ask your lawyer to confirm the final figure and how refunds will be handled at closing.
Worked examples you can copy
Use these examples as templates. Plug in your price and follow the same bracket math.
Example A: First-time buyer at $700,000
- Provincial LTT
- 0.5% on the first $55,000 = $275
- 1.0% on $55,000.01 to $250,000 = $1,950
- 1.5% on $250,000.01 to $400,000 = $2,250
- 2.0% on $400,000.01 to $700,000 = $6,000
- Provincial total = $10,475
- Municipal LTT = $10,475
- Combined LTT before refunds = $20,950
- First-time buyer refunds, if eligible:
- Provincial refund up to $4,000
- Municipal refund up to $4,475
- Total refunds = $8,475
- Net LTT payable = $20,950 − $8,475 = $12,475
Example B: Move-up buyer at $1,200,000
- Provincial LTT
- 0.5% on the first $55,000 = $275
- 1.0% on $55,000.01 to $250,000 = $1,950
- 1.5% on $250,000.01 to $400,000 = $2,250
- 2.0% on $400,000.01 to $1,200,000 = $16,000
- Provincial total = $20,475
- Municipal LTT = $20,475
- Combined LTT = $40,950
Example C: High-value purchase at $3,000,000
- Provincial LTT
- 0.5% on the first $55,000 = $275
- 1.0% on $55,000.01 to $250,000 = $1,950
- 1.5% on $250,000.01 to $400,000 = $2,250
- 2.0% on $400,000.01 to $2,000,000 = $32,000
- 2.5% on $2,000,000.01 to $3,000,000 = $25,000
- Provincial total = $61,475
- Municipal LTT = $61,475
- Combined LTT = $122,950
- First-time refunds still apply if you qualify, though they are small relative to this total.
First-time buyer refunds in Toronto
If you are a qualifying first-time homebuyer, you may receive two refunds that reduce your LTT at closing.
- Provincial first-time buyer refund: up to $4,000 off the provincial LTT. Generally you must be a true first-time buyer, plan to use the home as your principal residence, and meet residency or citizenship rules.
- City of Toronto refund: up to $4,475 off the municipal LTT. This can fully offset the municipal LTT on purchases up to $400,000 because of how the brackets work.
The refunds are separate. You can be fully refunded on the municipal side yet still owe a small provincial amount, or vice versa, based on price and the different caps. Your lawyer usually applies for refunds at closing or shortly after. Some programs require you to claim by a set deadline, often within a defined period such as up to 18 months in practice. Confirm timing and forms with your lawyer.
Other common exemptions and surcharges
Some transfers are exempt or treated differently, such as transfers between spouses or those resulting from death. Certain organizations, like registered charities or specific government transfers, may qualify for exemptions. Corporate reorganizations and some intra-family transfers can also have special treatment. These rules are technical, so discuss your exact situation with a real estate lawyer.
If you are a non-resident buyer, a non-resident speculation surcharge may apply in addition to LTT. Rates and coverage have changed over time. Always verify the current rules if you are a non-resident or a corporation.
How to plan for LTT at closing
Use this quick checklist to avoid surprises:
- Confirm your estimate. Use the combined Toronto rates, then apply any first-time refunds if you qualify. Have your lawyer verify the amount.
- Discuss refunds early. Ask your lawyer whether refunds will be applied at closing or claimed after closing. Plan your cash-to-close accordingly.
- Prepare funds. LTT is typically paid by your lawyer at closing. Your deposit, mortgage advance, and any additional cash must cover all line items on the closing statement, including LTT.
- Include all closing costs. Budget for legal fees, land registration, title insurance, adjustments, inspection, and any mortgage insurance or lender fees.
- Do not rely on builder credits. Incentives from a builder usually do not eliminate land transfer tax unless clearly documented as a price change or a program that actually affects LTT.
Verifying details and staying current
Tax rules can change. For the most accurate, up-to-date information, review the City of Toronto land transfer tax pages and first-time buyer refund pages, and the Government of Ontario’s land transfer tax and first-time buyer refund pages. Your lawyer can confirm eligibility, deadlines, and how your refunds will be filed. Your lender or broker can also explain how LTT fits into your funding and cash-to-close.
Ready to budget your purchase in Toronto?
If you are planning a move in Toronto or across the western GTA, clear numbers help you make confident decisions. We can help you estimate cash to close, coordinate with your lawyer, and align your purchase strategy with your financing and timeline. For tailored guidance on your next purchase, reach out to SHAHD KHAWAJA REAL ESTATE INC BROKERAGE.
FAQs
Who pays land transfer tax in Toronto and when is it due?
- Buyers pay both the Ontario and City of Toronto land transfer taxes, usually at closing through their lawyer.
How do first-time buyer refunds work in Toronto?
- You may receive two separate refunds, up to $4,000 on the provincial tax and up to $4,475 on the municipal tax, if you meet eligibility rules.
Can I lower LTT by negotiating a lower recorded price?
- No. LTT is based on the actual consideration, and in some non-arm’s-length cases fair market value is used. Undervaluing is illegal.
Will my mortgage cover land transfer tax at closing?
- Lenders advance mortgage funds at closing, but you must still provide enough cash to cover LTT and other closing costs beyond the mortgage proceeds.
Does buying a new build change the LTT calculation?
- LTT still applies to new builds. HST and any new-home incentives are separate programs and do not automatically reduce LTT.
