Taxes

In general, if you buy land or an interest in land in Ontario, you must pay Ontario’s land transfer tax, whether or not the transfer is registered at one of Ontario’s land registry offices.

Land includes any buildings, buildings to be constructed, and fixtures (such as light fixtures, built-in appliances and cabinetry).

Land transfer tax is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.

In some cases, land transfer tax is based on the fair market value of the land, for example, where:

• a lease can exceed 50 years;
• land is transferred from a corporation to one of its shareholders; and
• land is transferred to a corporation, if shares of the corporation are issued.

 

Reporting & Remitting Tax

You must pay Ontario’s land transfer tax at the time the transfer is registered.

If the transfer is not registered, you must submit a Return on the Acquisition of a Beneficial Interest in Land to the Ministry of Revenue along with payment of tax within 30 days.

Exemptions from land transfer tax are limited. The main exemptions include:

• certain transfers from an individual to their family business corporation;
• certain transfers of farmed land between family members;
• certain transfers between spouses;
• certain transfers of a life lease from a non-profit organization or a charity.

A deferral of land transfer tax may be available when land is transferred between affiliated corporations, and notice of the transfer is not registered in a land registry office.

For more information about exemptions and deferral of land transfer tax, refer to our list of land transfer tax bulletins.

Refund Program for First Time Homebuyers

First time purchasers of newly constructed homes may be entitled to a refund of Ontario’s land transfer tax, up to a maximum of $2,000. This refund is usually claimed at the time of registration. If not, the refund may be claimed directly from the Ministry of Revenue.

To claim a refund, you

• must be at least 18 years old;
• must occupy the home as your principle residence within 9 months after the date of transfer; and
• cannot have previously owned a home, or an interest in a home, anywhere in the world

In addition,

• your spouse can not have owned a home, or an interest in a home, anywhere in the
• world while being your spouse; and
• you must be entitled to a Tarion New Home Warranty Certificate.

Refunds must be made within 18 months of registration.

Expansion of Refund Program for First Time Homebuyers

As announced in the Ontario Economic Outlook and Fiscal Review 2007, the government proposes to expand the Land Transfer Tax Refund Program to include first-time homebuyers of resale homes.

This measure would be effective for agreements of purchase and sale entered into after December 13, 2007. As a result of this change, first-time homebuyers of resale homes would be able to receive a refund from the provincial government of up to $2,000 of the land transfer tax paid.

Refunds will be issued if the proposal becomes law. For details on how to apply, see Information Notice Details about the Proposed Expansion of the Land Transfer Tax First-Time Home Buyers Refund to Include Resale Homes.