First-time homebuyers’ break on the land transfer tax will double, under a new proposal by the Ontario government, but wealthy purchasers will pay the price once new land transfer rules come into effect Jan. 1, 2017.
Under the change, Ontario will double the maximum land transfer tax refund for eligible first-time homebuyers to $4,000. It means no eligible homebuyers in Ontario would pay land transfer tax on the first $368,000 of the cost of their first home.
Tim Hudak, the relatively new CEO of the Ontario Real Estate Association, had been calling for land-transfer tax breaks. In press statements made last week, he asked for help for first-time homebuyers to “help them get out of their parents’ house or get out of their apartment into a place of their own.”
The current land transfer tax rates—and their brackets—haven’t budged since 1989, and sit at:
Former Ontario Land Transfer Tax Rates
Home Purchase Price Tax Rate
Up to $55,000 0.5%
$55,000 to $250,000 1.0%
$250,000 to $400,000 1.5%
Above $400,000 2.0%
When the price brackets were first created, a $400,000 was considered the starting point for a luxury property. These days, however, a $400,000 home is no longer considered the benchmark for a luxury property in most parts of Ontario.
Under the new “modernized” land transfer rates, buyers of detached or semi-detached homes or condos or townhomes should expect to pay the following:
“Modernized” Ontario Land Transfer Tax Rates
Home Purchase Price Tax Rate
Up to $55,000 0.5%
$55,000 to $250,000 1.0%
$250,000 to $400,000 1.5%
$400,000 to $2-million 2.0%
$2-million and over 2.5%
Keep in mind, however, that buyers of multi-residential buildings (such as triplexes), commercial, industrial or agricultural properties will be required to pay 2% tax rate on any purchase price over $400,000.
