When a person is considering a home purchase, it’s important they include the land transfer tax (LTT) when determining the total cost of buying a house. Almost every Canadian province has an LTT. The exceptions are Saskatchewan and Alberta. In these two provinces, a transfer fee must be paid. When a person lives in Toronto and buys a house in Toronto, the LTT could double.

LTT Responsibility
The individual who purchases a condominium or house in Ontario will be required to pay the LTT at the time they purchase the property. The seller of the house or condominium is not responsible for paying it. As the residential real property is transferred in Ontario, the Ontario LTT will be calculated based on the purchase price. The amount is determined by the purchase price at the time of the registration of the Transfer/Deed of Land with the Ontario Land Registry Office. The LTT is determined using an upward sliding scale.

Fair Market Value
The LTT is usually based on the amount someone pays for the land. The amount left from a previous mortgage or debt taken on as part of the deal to buy the property is also factored into the LTT amount. There are situations where the LTT is determined by the fair market value of the land. This can happen when the transfer of a lease has fifty years or more on its remaining term. It also occurs when the land transfer is from a corporation to one of its shareholders. The other situation is when the land transfer is to a corporation and shares of the corporation are going to be issued.

First-time Homebuyers
A first-time homebuyer who qualifies is entitled to rebates when it comes to paying the LTT. They do not get a complete exemption from paying the LTT. According to the Ontario Land Transfer Act, the highest amount of rebate a first-time homebuyer will qualify for is $2,000.00. According to the Municipal Land Transfer Act, a first-time homebuyer could qualify for as much as $3,700.00. The highest rebate amount a qualified first-time buyer can receive is $5,725 for each property. It does not matter if there is more than one buyer. Should a rebate be more than the LTT, the government will only permit a rebate of the LTT amount and nothing more.

Paying LTT
The LTT needs to be paid when the property transfer is registered. Should the transfer not be registered within 30 days after closing, a form must be filed with the Ministry of Finance. The form is known as the Return on Acquisition of a Beneficial Interest. The payment for the LTT must be with the form when it is filed.

Exemptions
There are some exemptions when it comes to paying the LTT. It may not apply with transfers between spouses, transfers from a person to their family business, transfers of farmland between members of a family, life lease from a charity or non-profit organization.

Refunds And Overpayment
Should a person overpay their LTT, they can make a request for a refund from the Ministry of Finance. A letter must be written explaining the situation and include a copy of the registered conveyance, statement of adjustments, agreement of purchase and sale as well as evidence of the tax paid at the time of registration.

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