Understanding Land Transfer Tax in Ontario
Land transfer tax is usually the largest single closing cost a buyer faces in Ontario, and it catches people out for one reason: it is due in cash on closing day and it cannot be added to the mortgage. Here is how it is calculated, what the first-time buyer rebate is worth, and why a property inside the City of Toronto costs materially more to register.
The Ontario rates
The tax is charged in brackets. Each portion of the purchase price is taxed at its own rate — not the whole price at the top rate, which is the most common misunderstanding.
| Portion of the purchase price | Rate |
|---|---|
| Up to $55,000 | 0.5% |
| $55,000 to $250,000 | 1.0% |
| $250,000 to $400,000 | 1.5% |
| $400,000 to $2,000,000 | 2.0% |
| Above $2,000,000 | 2.5% |
Working it out quickly
Rather than adding up five brackets, you can apply a single rate to the whole price and subtract a fixed amount. The shortcuts below give exactly the same answer.
| Purchase price | Formula |
|---|---|
| $55,000 to $250,000 | (price × 0.01) − $275 |
| $250,000 to $400,000 | (price × 0.015) − $1,525 |
| $400,000 to $2,000,000 | (price × 0.02) − $3,525 |
| Above $2,000,000 | (price × 0.025) − $13,525 |
Take a $900,000 purchase, which is a realistic Mississauga or Oakville number:
($900,000 × 0.02) − $3,525 = $14,475
That is the amount your lawyer collects from you on closing, on top of the balance of the purchase price.
The first-time buyer rebate
First-time buyers can claim back up to $4,000 of the Ontario tax. Your lawyer claims it at registration, so it comes off the amount you have to bring to closing rather than arriving later as a cheque. On our $900,000 example, that takes $14,475 down to $10,475.
To qualify:
- You must be 18 or older.
- You must occupy the home as your principal residence within nine months of registration.
- You must never have owned a home, or an interest in one, anywhere in the world.
- You must be a Canadian citizen or permanent resident.
The spousal rule is the one that surprises people. If your spouse owned a home while you were spouses, the rebate is generally not available to either of you. If their ownership pre-dates the relationship, a partial claim is often possible — typically in proportion to your own interest in the property. It is worth asking your lawyer early rather than discovering the answer on closing day, because the amount is real money.
Buying inside the City of Toronto
Toronto charges its own municipal land transfer tax on top of the provincial one. For most purchases the municipal tax uses the same brackets as the province, so the total is simply double.
That stopped being true above $3,000,000. Since 1 January 2024, Toronto has applied graduated higher bands to expensive properties, and the municipal tax now exceeds the provincial one at those prices.
| Portion of the purchase price | Municipal rate |
|---|---|
| $2,000,000 to $3,000,000 | 2.5% |
| $3,000,000 to $4,000,000 | 3.5% |
| $4,000,000 to $5,000,000 | 4.5% |
| $5,000,000 to $10,000,000 | 5.5% |
| $10,000,000 to $20,000,000 | 6.5% |
| Above $20,000,000 | 7.5% |
What that means in practice. At $900,000 in Toronto you pay $14,475 provincially and $14,475 municipally — $28,950, exactly double. At $4,000,000 you pay $86,475 provincially but $96,475 municipally, because of those upper bands. The total is $182,950, which is $10,000 more than doubling would suggest.
Toronto has its own first-time buyer rebate of up to $4,475, claimable alongside the provincial $4,000. A first-time buyer purchasing at $900,000 in Toronto would pay $20,475 in total after both rebates.
Two things worth planning for
It cannot go on the mortgage. Land transfer tax is a closing cost, and closing costs are paid in cash on closing. Budget roughly 1.5% to 2% of the purchase price for closing costs in total, of which this is usually the largest part.
New builds are taxed the same way, but later. Land transfer tax applies to pre-construction exactly as it does to resale — you simply pay it at final closing, which may be years after you signed. Plan for it well in advance.
You can work out the figure for any price, with or without the Toronto tax and the rebates, using our land transfer tax calculator. If a number does not look right to you, ask us — and confirm the final amount with your real estate lawyer, who is the person who actually remits it.
