Frequently Asked Questions About Leases
- Is a lease subject to land transfer tax?
- How is land transfer tax calculated on a lease with a term over 50 years (including any renewals or extensions)?
- Is land transfer tax payable upon the registration of a surrender or a notice of surrender of lease?
- Is land transfer tax payable on leases under fifty years with options to purchase?
Is a lease subject to land transfer tax?
A lease is subject to land transfer tax only if the term of the lease, including any renewals or extensions, exceeds 50 years.
How is land transfer tax calculated on a lease with a term over 50 years (including any renewals or extensions)?
On a lease with a term over 50 years, land transfer tax is calculated on the fair market value of the land, as at the date of registration of the notice of lease or as at the date of disposition for an unregistered lease.
Is land transfer tax payable upon the registration of a surrender or a notice of surrender of lease?
The registration of a surrender or a notice of surrender of lease is subject to land transfer tax, for a term that exceeds 50 years and only on the actual consideration that passed for the granting of the surrender.
Is land transfer tax payable on leases under fifty years with options to purchase?
Leases under 50 years are not taxable. However, the granting or assigning of an option to purchase is taxable, and any lease which contains such an option must set out in the affidavit any consideration being paid for the granting or assigning of the option, (but not the option exercise price). Tax is payable accordingly.
For further information refer to Ontario Tax Bulletin LTT 6-2000 – Leases and the Land Transfer Tax Act.
