Refunds for First Time Purchasers of Newly Constructed Homes

Tax Bulletin LTT 4-2003, revised July 2005

This bulletin sets out the requirements to qualify for and the procedures to apply for a refund of land transfer tax on the purchase of a newly constructed home by a first time purchaser provided for under section 9.2 of the Land Transfer Tax Act (Act).
This bulletin replaces Ontario Tax Bulletins LTT 2-2000, LTT 7-2000, LTT 2-2001 and those parts of LTT 1-2000 and LTT 1-99 relating to the refund program for first time purchasers of newly constructed homes.
The information in this bulletin does not replace the law found in the Act and related regulations.

General

The Act imposes a tax on all acquisitions of land in Ontario. Under certain conditions, first time purchasers of newly constructed homes may be eligible for a refund of all or part of the tax payable on their acquisitions.

Qualifying taxpayers may claim an immediate refund at time of registration as follows:

if registering electronically, by completing the required statements under the explanation tab of the electronic affidavit, or
if registering on paper, by filing a Land Transfer Tax Refund Affidavit for First Time Purchasers of Newly Constructed Homes at the Land Registry Office.

Amount of Refund

The amount of refund claimed will, if granted, offset the land transfer tax otherwise payable to a maximum of $2,000 for agreements of purchase and sale entered into after March 31, 1999, or a maximum of $1,725 for agreements entered into on or before March 31, 1999. No interest is paid on this refund.

Limitation

If a purchaser is not the only transferee named in the conveyance, the refund payable will be reduced to the purchaser's interest acquired under the conveyance. The purchaser may also claim a refund in proportion to his or her spouse's interest if the purchaser's spouse has owned an interest in a home before becoming the purchaser's spouse, but not while the purchaser's spouse.

Application Form

If registering by way of paper registration or if claiming a refund after registration through the Ministry of Revenue, a qualifying purchaser must complete a Land Transfer Tax Refund Affidavit for First Time Purchasers of Newly Constructed Homes form in order to apply for the refund.

Definitions

"newly constructed home" means a home in respect of which the purchaser is entitled to a warranty under section 13 of the Ontario New Home Warranties Plan Act (ONHWPA) and which is sold to the purchaser by a vendor as defined in ONHWPA.

"purchaser" means an individual who is at least 18 years of age and who has never owned an eligible home, as defined in the Ontario Home Ownership Savings Plan Act, anywhere in the world and whose spouse has not owned an eligible home anywhere in the world while he or she was a spouse of the individual.

"spouse" means spouse as defined in section 29 of the Family Law Act. At present, "spouse" means either of two persons who are married to each other, or who are not married to each other and who have cohabited,

continuously for a period of not less than three years, or
in a relationship of some permanence, if they are the natural or adoptive parents of a child.

Requirements to Qualify for a Refund

Eligibility Requirements

The purchaser must be at least 18 years of age.
The purchaser must occupy the home as his or her principal residence no later than nine months after the date of the conveyance or disposition.
The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world while he or she was the purchaser's spouse. If this is the case, no refund is available to either spouse.

Note This refund cannot be claimed if the purchaser has received an Ontario Home Ownership Savings Plan (OHOSP)-based refund of Land Transfer Tax. If no such refund has been received, an OHOSP plan holder who is a qualifying purchaser may apply for the refund available on the purchase of a newly-constructed home.

Deadline to Apply for Refund

A qualifying purchaser must apply for the refund no later than 18 months after the date on which the conveyance is registered or the unregistered disposition occurs.

Procedures to Apply for Refund

Electronic Registration

Where registration is effected electronically, the refund may be claimed by selecting the appropriate electronic statements located under the explanation tab of the land transfer tax section. Statement 9027 or 9028 (whichever is applicable) must be completed.

As well, the following statements must be completed:

9127 and
9128 or (9129 and either 9130 or 9131) and
9132 and
9133

Note that statements 9027, 9028, 9127, 9131, 9132 and 9133 require additional information to be entered.

Completing these statements replaces the previous requirement to submit a hard copy of the Land Transfer Tax Refund Affidavit For First Time Purchasers of Newly Constructed Homes to the Land Registrar to confirm that the requirements for the refund have been met.

The wording of these electronic statements is as follows:

9027

Fraction of parties who are new home purchasers: ALL OR FRACTION (N/D) and the agreement of purchase and sale was entered into on or before March 31, 1999,

9028

Fraction of parties who are new home purchasers: ALL OR FRACTION (N/D) and the agreement of purchase and sale was entered into on or after April 1, 1999,

9127

NAME(S) is/are (a) first time home purchaser(s) as defined in the Land Transfer Tax Act, and

9128

None of the purchaser(s) is/are a "spouse" as defined in section 29 of the Family Law Act

9129

The purchaser(s) has/have (a) "spouse(s)" as defined in section 29 of the Family Law Act, and

9130

(a) The spouse(s) has/have never owned an eligible home

9131

(b) The spouse(s) NAME(S) previously owned an eligible home at ADDRESS, but sold it on YYYY/MM/DD (Note In order to qualify for a refund, any spouse must have sold any eligible home prior to becoming the spouse of the first time home purchaser)

9132

The purchaser(s) will occupy the newly constructed home as his/her/their principal residence on YYYY/MM/DD (Note must be within 9 months of the date of registration or disposition), and

9133

The "newly constructed home", is a home in respect of which the purchasers are entitled to a warranty under the Ontario New Home Warranties Plan Act. The registration number for the builder of the newly constructed home is NUMBER.

Refunds Claimed at Land Registry Office

Qualifying taxpayers or their solicitors may claim an immediate refund at the time of registration by filing the Land Transfer Tax Refund Affidavit for First Time Purchasers of Newly Constructed Homes along with their Transfer/Deed and Land Transfer Tax Affidavit at a Land Registry Office.

Refunds Claimed at the Ministry of Revenue

Where a qualifying taxpayer is unable to claim the refund at registration, the tax will be payable at that time and a refund claim may be made directly to the Ministry of Revenue, at the address on page 4 of this bulletin. The following documentation must be submitted in order for a refund claim to be processed:

A properly completed form - Land Transfer Tax Refund Affidavit for First Time Purchasers of Newly Constructed Homes;
A copy of the registered conveyance (transfer/deed) (if not registered electronically, this should be a photocopy of the Land Registry Office's original which shows the tax paid);
A copy of the agreement of purchase and sale and statement of adjustments relating to the conveyance; and
A copy of the Ontario New Home Warranty Certificate, which is also known as the Certificate of Completion and Possession.
A copy of the docket summary will also be required if registration was effected electronically.

Additional Information

If this bulletin does not completely address your particular situation, refer to the Act and related regulations, or contact the:

Ministry of Revenue
Tax Compliance Branch
Land Transfer Tax Program
33 King Street West
PO Box 625
Oshawa ON L1H 8H9
Tel.: 905 433-6361
Fax: 905 433-5770
TTY (Teletypewriter): 1 800 263-7776

This publication and various other English and French tax bulletins published by the Ministry of Revenue, may be obtained online at www.ontario.ca/revenue.

The Land Transfer Tax Act and Ontario's other statutes and regulations may be obtained online at www.e-laws.gov.on.ca.

ISBN 0-7794-8654-4 rev. 05/07