Land Transfer Tax in Canada: Who Pays and How Much

Land Transfer Taxes in Canada: What Home Buyers Should Know

Buyers pay land transfer tax as a closing cost when purchasing real estate in Canada. LTT exemptions and rebates are available in certain circumstances.

Smiling black couple discusses land transfer tax rates while sitting on couch.

A land transfer tax, sometimes referred to as a property transfer tax, is one of several closing costs that must be paid when buying property in Canada.

It’s important to understand how much land transfer tax might cost you — and how you’ll pay it — when you’re deciding on a realistic home buying budget.

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What are land transfer taxes?

Land transfer taxes are collected by a province, municipality or both, depending on where you live. Every province has some version of a land transfer tax, although it may go by a different name. Quebec levies a “welcome tax,” for instance, while Alberta and Saskatchewan charge a “property registration fee.”

Land transfer taxes vary by region, and some municipalities charge considerably higher transfer fees than others. However, if you are a first-time home buyer, you may be eligible to get some (or all) of your tax payment refunded.

Land Transfer Tax Calculator:
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Who pays land transfer tax?

In Canada, no matter the province or municipality, it’s the buyer that pays the land transfer tax, not the seller.

Land transfer taxes are due as soon as the buyer takes possession of the property. Unlike property taxes, land transfer taxes must be paid in full as a one-time payment. They should be factored into the funds you set aside for closing costs.

Can you avoid land transfer taxes?

In addition to cases where first-time home buyers may be eligible for a partial or full refund of their land transfer taxes, there are other situations where land transfer tax can be avoided. These include:

Purchasing a newly built home.
Transferring the property to a lineal descendent (i.e. parent to child).
Transferring a property between spouses.
Transferring a property from a person to a family business.
Transferring a farming property between family members.

Each province and municipality has its own rules regarding land transfer tax exemptions, so seek specific details from your local government and consider speaking to an expert, such as an accountant or tax specialist.

How to calculate land transfer tax

Land transfer taxes are typically calculated as a percentage of the property’s estimated value, which often resembles the purchase price. In many places, the percentage you’ll pay is higher for more expensive homes — similar to income tax brackets that charge a higher tax rate in higher tiers of income. For example, a house in Ontario that costs $500,000, you would pay:

0.50% on the first $55,000 of the price = $275
1% on the next $195,000 of the price = $1,950
1.5% on the next $150,000 of the price = $2,250
and 2% on the final $100,000 of the price = $2,000

Your total land transfer tax would be $6,475. If you’re a first time home buyer in Ontario, you might be eligible for a land transfer tax rebate of up to $4,000, which would reduce your land transfer tax bill to $2,475.

To save time, you can use a land transfer tax and fee calculator to find out how much you’re likely to pay. But if you’re not in a rush, looking at the math can help you visualize how land transfer taxes are calculated. To do that let’s compare the purchase of a property valued at $500,000 in Ottawa, Toronto and Vancouver.