Who Pays The Ontario Land Transfer Tax? Home Buyers Or Home Sellers?
The simple answer to that question is the home buyer is 100 percent responsible for paying the Ontario land transfer tax. This applies to the purchase of a condo or house in Ontario.
A homebuyer in Ontario is taxed twice for the privilege of purchasing a Toronto house or condo. The home buyer must pay a municipal and a provincial land transfer tax.
How Much Is The Ontario Land Transfer Tax?
There is a basic formula used to calculate the land transfer tax. The formula is based on the purchase price. There are plenty of Ontario land transfer tax calculators to help you figure out the exact cost for your own home purchase.
If you purchased a $1 Million dollar home in Toronto, the total land transfer tax you need to pay would be $32,950. This is an amount on top of the purchase price. That’s more than 3 percent of the total home price.
All homebuyers must pay the tax at the time of closing. You can’t write off land transfer taxes either. And you can’t roll it into your mortgage to finance the payments over years or decades.
In the meantime, you’re basically just handing over a large bag of cash to the Ontario government for the privilege of being able to buy a property in Ontario.
What about First Time Home Buyers?
First-time home buyers in Toronto do receive some relief in the form of tax rebates. First time home buyers receive up to a maximum of $4,000 from the province and $4,475 from the City of Toronto. And it’s a one time deal only for first time buyers.
The greatest irony regarding the tax is that it’s a steep fee to pay for the privilege of buying a home. Ironically, the provincial and municipal governments are claiming to be working on solutions to promote housing affordability. It doesn’t seem very affordable to most homebuyers.