Changes to Ontario’s Land Transfer Tax

In the November 14, 2016 Ontario Economic Outlook and Fiscal Review, the Minister of Finance the Honourable Charles Sousa announced that starting on January 1, 2017 there will be a number of changes to the Land Transfer Tax in order to modernize the tax paid on the transfer of real estate in Ontario.

 

The first change is to the way in which the tax is determined by making two changes to the land transfer tax brackets and rates.  

 

Value

Residential: 2016

Residential: 2017

Other: 2016

Other: 2017

$0 – $55,000

0.5%

0.5%

0.5%

0.5%

$55,000 – $250,000

1.0%

1.0%

1.0%

1.0%

$250,000 – $400,000

1.5%

1.5%

1.5%

1.5%

$400,000 – $2,000,000

2.0%

2.0%

1.5%

2.0%

$2,000,000 –

2.0%

2.5%

1.5%

2.0%

 

The second change relates to a land transfer tax credit for first time home buyers.  Under the current rules, first time home buyers are entitled to a credit of the land transfer tax of up to $2,000.  With this value, no land transfer tax would be paid by a first time home buyer when the purchase price was $227,500 or less.  Beginning January 1, 2017 the tax credit is being increased to a maximum $4,000.  With this new maximum credit, first time home buyers can purchase a home of up to $368,000 without paying land transfer tax.

The third and last change relates to the resident status of the first time home buyer.  In order to be eligible for the first time home buyer tax credit, the purchaser must be either a Canadian citizen or permanent residents of Canada at the time of purchase.  This measure also becomes effective as of January 1, 2017.