LAND TRANSFER TAX
When you buy land or an interest in land in Ontario, you pay Ontario's land transfer tax. Land includes, but is not limited to, any buildings, buildings to be constructed, and fixtures (such as light fixtures, built‑in appliances and cabinetry). In addition, for certain transfers of land within the Greater Golden Horseshoe Region, a 15% Non‑Resident Speculation Tax (NRST) may apply.
WHO PAYS THE LAND TRANSFER TAX?
When you acquire land or a beneficial interest in land, you pay land transfer tax to the province when the transaction closes.
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, such as in the following examples:
the transfer of a lease with a remaining term that can exceed 50 years
the transfer of land from a corporation to one of its shareholders, or
the transfer of land to a corporation, if shares of the corporation are issued.
PROVIDING ADDITIONAL INFORMATION
On April 24, 2017, the province began collecting additional information to better understand trends in the housing market through the land transfer tax system. This additional data will be used for the administration and enforcement of the Land Transfer Tax Act, and to support evidence based policy development with respect to Ontario's real estate market.
All persons who purchase or acquire land in Ontario that contains at least one and not more than six single family residences, or agricultural land, are required to provide this additional information.
If you are a first‑time homebuyer, you may be eligible for a refund of all or part of the land transfer tax.
OTHER LAND TAXES
The Non-Resident Speculation Tax (NRST) is a 15% tax on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe Region by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) and taxable trustees.
Local municipalities charge a tax on the residential or business property you own. If you have questions about municipal property tax, contact your local municipality. If your property is located in an unorganized territory (an area without municipal organization) of Ontario, property tax is collected through the provincial land tax program administered by the Provincial Land Tax Office in Thunder Bay.
If you buy property in the City of Toronto, you may also pay the City of Toronto's own municipal land transfer tax.
HARMONIZED SALES TAX
The harmonized sales tax (HST) applies to newly constructed homes or substantially renovated homes, but does not apply to resale homes. Buyers of new homes may receive a rebate of up to $24,000 of the provincial portion (8%) of the HST. If you have any questions about the HST rebate please contact the Canada Revenue Agency at 1‑800‑959‑1953.
PAYING THE TAX
Ontario's land transfer tax is payable when the transfer is registered.
If the transfer is not registered within 30 days of closing, you must submit a Return on the Acquisition of a Beneficial Interest in Land form to the Ministry of Finance, along with the payment of tax within 30 days after the closing date.
Some person(s) do not pay land transfer tax on certain transfers of land. The exemptions include, but are not limited to:
certain transfers between spouses
certain transfers from an individual to his or her family business corporation
certain transfers of farmed land between family members
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 on title.
Commencing December 30, 2017, Teraview will accept Non-Resident Speculation Tax payments at the time of registration. However, Land Registry Offices will not accept payments of Non-Resident Speculation Tax. For registrations of instruments at a Land Registry Office on which Non-Resident Speculation Tax is payable, both Non-Resident Speculation Tax and land transfer tax must be pre-paid to the Ministry of Finance.
GENERAL ANTI‑AVOIDANCE RULE (GAAR)
The Land Transfer Tax Act was amended to set out a general anti‑avoidance rule. This rule applies to transactions that are completed after May 1, 2014. It also applies to transactions that occurred on or before May 1, 2014 if they are part of a series of transactions that is completed after May 1, 2014.
OVERPAYMENT AND REFUNDS
If you overpaid land transfer tax, including Non-Resident Speculation Tax, you can ask the Ministry of Finance for a refund. To request a refund, follow the steps below:
Write a letter explaining the reason for your refund request and include:
a copy of the registered conveyance
evidence of the amount of tax paid on registration
a copy of the agreement of purchase and sale (including all schedules and amendments)
a copy of the statement of adjustments, and
if you request a refund for overpayment of Non-Resident Speculation Tax, a completed Ontario Land Transfer Tax Refund/Rebate Affidavit, with section 1 completed.
Mail your letter to:
Ministry of Finance
Land Taxes Section
33 King Street West, 3rd Floor
Oshawa, ON, L1H 8H9
There is no time restriction where a refund is requested for land transfer tax paid on registration of a notice or caution where the transfer contemplated in the agreement referred to in the notice or caution did not take place.
First-time homebuyer refund requests must be made within 18 months after the date of the transfer.
All other refund requests must be made within 4 years after the date of payment of the tax.
For rebates of Non-Resident Speculation Tax, read the Non-Resident Speculation Tax. Time limits for rebates of Non-Resident Speculation Tax may be shorter than for refunds.