The Basics of Ontario Land Transfer Tax (LTT)

The Basics of Ontario Land Transfer Tax (LTT)

April 26, 2017

While we are on the topic of Land Transfer Tax (LTT) obligations in Ontario, here’s a little refresher:

Who has to pay LTT?

As most of you will know, anytime you buy land or an interest in land in Ontario, you are required to pay Land Transfer Tax (LTT).

When does LTT have to be paid?

The tax is payable when your transfer is registered.

Are there any exemptions?  And can payment of the LTT be deferred?

Some transactions do not attract LTT, namely certain transfers between spouses and other family members in specified situations. The payment of LTT can also be deferred in very narrow circumstances.

What property attracts the payment of tax?

“Land” includes buildings, buildings to be constructed, structures, structures to be constructed as part of an arrangement relating to a conveyance of land, and fixtures (such as light fixtures, builtin appliances and cabinetry).

How is the value of the land calculated?

The amount of LTT you have to pay will depend on the total amount that you are paying for the property.  

The following are included in that total:

  • Extras, for example, upgraded flooring, cupboards, doors, windows, counters, architectural changes, and finished basements.
  • Upgrades, for example, lot premiums, tree planting, sodding and grading, driveway paving.

Also, the cost of builder-paid installations for gas, hydro, water meters etc. are also included, as are lot levies, development charges, school levies, Ontario New Home Warranty Plan fee, architect’s fees, etc.

Exclusions from the total include chattels such as fridges, stoves, dishwashers, draperies, furniture and equipment are included in the purchase of the home.

How is the LTT amount calculated?

Effective January 1, 2017, the tax rates for LTT depended on the date of the agreement of purchase and sale and the subsequent registration of the transfer.

If an agreement of purchase and sale is entered into after November 14, 2016, and the closing and registration occurs on or after January 1, 2017, then the tax rates on the value of the consideration are as follows:

There were transitional Land Transfer Tax rates that governed all registrations and dispositions of land that occurred prior to January 1, 2017. Tax was calculated on the value of the consideration at the following rates:

Note that for transfers with agreements of purchase and sale that were entered into on or before November 14, 2016, the above rates applied regardless of the actual registration date.