Land transfer tax is one of those sneaky fees that are way too easy to forget about when you’re focusing on buying your new home.
And while the fee may seem small compared to the monstrous total cost of a house, it does make quite a dent in your budget for the first year of home ownership. The worst part is it’s only one of a series of fees included in the “closing costs” of buying a home.
So before you get blindsided by yet another unexpected fee, here’s everything you need to know about land transfer tax in Canada.
What is land transfer tax?
Land transfer tax (sometimes referred to as LTT) is a one-time fee paid by property buyers when they buy a home in most provinces. Together with property tax, it’s one of the main sources of income for municipalities.
The total cost of land transfer tax is usually calculated as a percentage of the property value, but each province may have a slightly different way of calculating it.
It can go by other names such as:
- property transfer tax,
- real property transfer tax,
- deed transfer tax, or even
- welcome tax.
One last thing to keep in mind is to not be fooled by the word “land” – it applies to all real estate, including condo purchases.
First-time home buyer land transfer tax rebate
Here’s some good news. In some provinces and municipalities, first-time home buyers are eligible for rebates on the land transfer tax.
These include:
- British Columbia,
- Ontario,
- Prince Edward Island, and
- Montreal.
The qualification requirements, application process, and rebate amount vary depending on the jurisdiction. We’ll be speaking about this in more detail in this section.
Land transfer tax calculator
In most cases, your lawyer will calculate the amount of land transfer tax and send it to the appropriate government department. You generally don’t have to worry about the logistics.
But if you want to get an idea in advance how much the land transfer tax will be, you can use one of the many available online calculators.
Want to know what your mortgage payments will look like? Check out our easy mortgage calculator here.
When you have to pay land transfer tax
Land transfer tax is paid by the buyer of the property – not the seller. So that means the only time you have to worry about paying land transfer tax is when you’re buying property.
In most provinces, it’s paid on the closing date and is one of the many costs associated with buying a property.
Once it’s out of the way, it’ll be overshadowed by your mortgage more often than not – which is obviously where the majority of your money is going.
Remember to shop around for the best mortgage rates
It’s important to note that, if you’re really concerned about saving money when buying a house, focusing on your mortgage rate is the most effective place to start.
Comparison shopping can save you thousands over the lifetime of your mortgage.
That’s because there can be quite a difference in interest rates and payment options from one lender to another. And even the difference of a single percent point can mean a huge difference at the end of your mortgage, thanks to how much money is on the line.
So before locking in with a mortgage, don’t forget about online banks and trust companies. They often have lower mortgage rates than the big banks.
One easy way to make sure you get the right mortgage rate is by using a mortgage broker. These are useful services that may even haggle your rates down for you.
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Land transfer tax by province
The amount of land transfer tax you’ll need to pay varies greatly from province to province, as you can see in this table.
| Province | Land transfer tax | First time home buyer rebate | Learn more |
|---|---|---|---|
| Alberta | * Property value: $50 + $2 for every $5,000 of property value * Mortgage value: $50 + $1.50 for every $5,000 of mortgage |
* None | * Link |
| British Columbia | * 1% up to $200k * 2% from $200k to $2,000,000 * 3% from $2,000,000 to $3,000,000 * 5% over $3,000,000 |
* Full refund if value of property is $500,000 or less * Partial refund if property value is between $500,000 and $525,000 |
* Link * Link |
| Manitoba | * First $30k: 0% * $30,001 to $90k: 0.5% * $90,001 to $150k: 1% * $150,001 to $200k: 1.5% * Over $200k: 2% |
* None | * Link |
| Newfoundland and Labrador | * Property value: $100 + $0.40 for each $100 over $500 * Mortgage value: $100 + $0.40 for each $100 over $500 | * None | * Link |
| New Brunswick | * 1% of property value | * None | * Link |
| Nova Scotia | * Varies by municipality between 0.5% and 1.5% * Halifax is 1.5% |
* Rebate of up to 18.75% of the provincial tax on newly constructed homes (up to $3,000) | * Link * Link |
| Ontario | * First $55k: 0.5% * $55,000.01 to $250k: 1% * $250,000.01 to $400k: 1.5% * $400,000.01 to $2,000,000.00: 2% * Over $2,000,000: 2.5% * Toronto: Additional land tax, same amount as provincial tax |
* Refund up to $4,000 | * Link * Link |
| Prince Edward Island | * 1% of property value | * Completely waived | * Link |
| Quebec | * Under $52,800: 0.5% * $52,800 to $264k: 1% * Over $264,000: 1.5% * Note: Montreal has different rates |
* None (except in Montreal) | * Link * Link |
| Saskatchewan | * Under $500: 0% * $501 to $8,400: $25 * Over $8,401: 0.3% |
* None | * Link |
As a comparison, here’s how much you’d pay on a house worth $500,000.
Note: We used Montreal rates for Quebec, Toronto rates for Ontario, and Halifax rates for Nova Scotia. This is also just a snapshot of estimated rates. Your real estate agent or lawyer will be able to calculate the rates for your particular property.
Here are some more details for each province.
Alberta land transfer tax
Though there’s technically no land transfer tax in Alberta, the buyer pays a property registration fee and mortgage registration fee as part of their closing costs.
Because these aren’t land transfer taxes, there also isn’t a first-time home buyer discount.
British Columbia land transfer tax
Buyers in British Columbia pay Property Transfer Tax, based on the fair market value of the property.
The tax is based on a marginal structure, similar to how income tax is calculated. So the rate of tax paid increases as the property value goes up.
First time homebuyers are exempt from paying this tax if the fair market value is under $500,000. They can also get a partial exemption if the fair market value is between $500,000 and $525,000.
Manitoba land transfer tax
Similar to British Columbia, Manitoba also has a marginal tax rate for their land transfer taxes, though with much smaller increments.
Unlike BC, they don’t receive first-time home buyers rebates.
Newfoundland and Labrador land transfer tax
Instead of strictly land transfer taxes, Newfoundland and Labrador charges a fee for registry of deeds. Unlike most other provinces, the amount paid is based on both the mortgage value as well as the property amount.
There are no first-time buyer incentives.
New Brunswick land transfer tax
New Brunswick charges buyers Real Property Transfer Tax at a flat rate of 1% of the property value.
There is no rebate for first-time homebuyers.
Nova Scotia land transfer tax
In Nova Scotia, each municipality determines its own deed transfer tax rate.
The highest rate is 1.5% of property value in Halifax but 2 municipalities (for example Kentville) don’t charge anything at all. You can see the complete list here.
First-time homebuyers do get a rebate in Nova Scotia, which is 18.75% of the provincial portion of the tax, up to $3,000. The catch is the home has to be newly constructed.
Ontario land transfer tax
Ontario has a progressively increasing land transfer tax rate based on property value. First-time homebuyers get a rebate of up to $4,000.
Toronto has its own Municipal Land Transfer Tax in addition to the provincial tax. The tax rates are the same as the provincial rate, so if you buy a home in Toronto you pay double the amount. They do have a rebate of taxes paid, up to $4,475.00, for first-time homebuyers.
Prince Edward Island land transfer tax
Prince Edward Island charges a land transfer tax (called “Real Property Tax”) based on a flat rate of 1% of the property value. If the property value is under $30,000 then no tax is payable.
There is also no tax payable for first-time homebuyers who meet the required conditions. You can read more about the exemptions here.
Quebec land transfer tax
Quebec’s land transfer tax (commonly known as the “Welcome Tax”) has a marginal tax structure between 0.5% and 1.5%.
It’s important to note that Montreal does have a different structure than the rest of the province. It’s as follows:
- Under $52,800: 0.5%
- $52,800 to $264,000: 1%
- $264,000 to $527,900: 1.5%
- $527,900 to $1,055,800: 2%
- $527,900 to $1,055,800: 2.5%
- Over $2,041,900: 3.0%
In Montreal only, there’s a special incentive for first-time home buyers. Families with children under 18 can get a lump-sum payment of up to $6,250. Single people and families without children can receive $2,250.
Saskatchewan land transfer tax
There’s no land transfer tax in Saskatchewan, but there is a land title transfer fee.
In most cases it works out to 0.3% of the purchase price, so on a $500,000 home the fee would be $1,500.
There’s no reduction for first-time homebuyers.
How to save money on land transfer tax
Though there’s no way to avoid land transfer taxes completely in certain provinces (unless you’re a first-time home buyer), here are 3 strategies to help reduce your cost.
1. Move to a province with lower rates
Tax rates can vary a lot from province to province – sometimes even within the provinces themselves. If you have the flexibility to live anywhere, buying in a different location can save you thousands.
For example, British Columbia has a marginal tax rate (based on fair market value) as follows:
- 1% of value up to $200,000
- 2% of value between $200,000 and $2,000,000
- 3% of value above $2,000,000
But New Brunswick, in contrast, has a land transfer tax of 1% across the board. If your house budget is on the higher end, you could save a decent stack of cash by moving to a comparably valued home in New Brunswick over British Columbia.
As an example, say your budget is $2,000,000. You’d pay $38,000 in land transfer taxes in British Columbia, but only $20,000 in New Brunswick.
2. Shop for a less expensive house
Land transfer tax is paid by the buyer based on the purchase price, so buying a less expensive home will reduce the amount of the tax.
Using the New Brunswick example of 1% again, that $20,000 price tag for a $2,000,000 home goes down to a much more palatable $2,000 if your home is worth $200,000.
If moving further away from cities or buying a fixer upper is in the realm of possibility for you, this could help you save on land transfer tax (as well as mortgage payments).
3. Increase your down payment
In Alberta and Newfoundland and Labrador, the amount paid is based on the mortgage amount on top of the property purchase price.
Increasing your down payment in these provinces will shrink your mortgage payment, which will in turn lower your land transfer tax.
Do you have to pay land transfer tax?
What do you think about land transfer tax?
Do you consider it a necessary evil or just a money grab?
Does it influence your home buying decision?
Let us know in the comments below.
FAQ
What is land transfer tax?
Land transfer tax is a one-time fee paid by buyers when purchasing property. In most cases, it goes to the government to help pay for municipal services.
How much land transfer tax do I have to pay?
That depends on where the property is located, the purchase price, and sometimes the amount of your mortgage. Click here to see how it breaks down per province.
Do first-time home buyers get a land transfer tax rebate?
If you want to save on taxes, the provinces of Ontario, British Columbia, Nova Scotia, Prince Edward Island, and the city of Montreal offer land transfer tax rebates for first-time homebuyers.
Who pays land transfer tax?
Land transfer tax is always paid by the buyer of the property, not the seller. So you’ll have to keep this in mind when calculating your mortgage and closing costs.
How much is land transfer tax in Ontario?
Land transfer tax in Ontario is on a tiered structure based on the purchase price of your home, ranging from 0.5% to 2.5%. In the case of Toronto, you’ll have to pay the same amount again in municipal taxes.
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