Today we're going to talk about the City of Toronto Land Transfer Tax (LTT).
If you're planning on buying property in Toronto, it's important to understand how this tax works and how it's calculated. First off, it's important to know that the City of Toronto LTT is separate from the provincial Land Transfer Tax that is also charged when buying property in Ontario. The City of Toronto LTT applies to all properties located within the city and is calculated as a percentage of the purchase price.
The current LTT rates are as follows:
- 0.5% on the first $55,000
- 1% on the portion of the purchase price between $55,000 and $250,000
- 2% on the portion of the purchase price above $250,000
For example, if you were to buy a property for $500,000, the calculation would look like this: 0.5% on the first $55,000 = $275 1% on the next $195,000 = $1,950 2% on the remaining $250,000 = $5,000The total LTT would be $7,225 in this example.
Is there a Toronto Land Transfer Tax Rebate for first-time homebuyers?
It's important to note that the first-time homebuyers rebate is a program that provides a rebate on the City of Toronto Land Transfer Tax for eligible first-time homebuyers. The rebate is available for a maximum of $4,475 and can help offset some of the costs of purchasing a home in Toronto.
In order to qualify for the rebate, the individual(s) must meet the following criteria:
-The individual(s) must be at least 18 years of age-The individual(s) must occupy the property as their principal residence within 9 months of the date of the transfer
-The individual(s) must not have previously owned an interest in a home anywhere in the world, either alone or with someone else, at any time before the date of the transfer. The property itself also needs to meet certain criteria to be considered eligible for the rebate:
-The property must be located within the City of Toronto-The property must be used for residential purposes
-The property must be the first purchase of an eligible individual (as described above)In the case of multiple buyers, all buyers are required to qualify as first-time homebuyers, and one of the buyers must intend to occupy the home as their principal residence.
Another important thing to remember is that LTT is generally due at the time of closing and is typically covered by the buyer, although it can be negotiated as part of the purchase agreement between the buyer and seller.
The bottom line
In summary, the City of Toronto Land Transfer Tax is an additional tax that is charged when buying property within the city. It's calculated as a percentage of the purchase price, with different rates applying to different portions of the purchase price. It's important to factor this into your budget when purchasing a property in Toronto and consider all other closing costs. If you have any questions about the City of Toronto Land Transfer Tax or need help with your real estate purchase, don't hesitate to reach out to a professional for guidance.
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