Changes to Ontario Land Transfer Tax

Today, the Province of Ontario announced changes to Land Transfer Tax (LTT) to try and ease the cost of buying for First Timers while making other changes to maintain the cash flow generated from the tax by increasing the amount of tax charged on premium homes.  These changes are aimed at making it easier for first time buyers to get into the hot real estate market of the GTA and surrounding areas by lowering closing costs in the hopes or leaving more cash in the hands of buyers to use for their downpayment.

Land Transfer Tax Rebate for First Time Buyers

The Province has announced that it will be doubling the rebate on Land Transfer Tax given to First Time buyers on the Ontario portion of the tax. First Time buyers will now see a maximum savings on the Ontario portion of the tax of $4000, this is up from the previous amount of $2000. This change will take affect January 1st, and means that first time buyers will not pay Ontario LTT on the first $386,000 of their home.

There has been no change announced yet to the Toronto portion, so the maximum rebate on the Toronto portion remains at $3725.  Toronto Mayor John Tory has said he is looking at options to help first time buyers enter the market, but no announcements have been made by the City of Toronto yet.

Land Transfer Tax Increase on properties over $2 Million

To cover the lost income from the increased rebate the Province is increasing the Land Transfer Tax amount on the amount above $2,000,000. The Province will be increasing the LTT on the purchase amount above $2 Million to 2.5%. Currently the Province charges 0.5% on the first $55,000 of the purchase, 1% on $55,000 to $250,000, 1.5% on $250,000 to $400,000, and 2% on everything over $400,000. The 2.5% will only be on the portion above $2 Million and not affect purchases where the price is below that.

Here’s more from the Financial Post. http://business.financialpost.com/news/economy/ontario-land-transfer-tax-rebate-doubled-to-4000-for-first-time-homebuyers