Land transfer taxes are one of many fees associated with buying real estate in Ontario. Upon the purchase of land or an interest in land in Ontario, the buyer is required to pay land transfer tax after closing. Land transfer taxes are based on the price paid for the property. Once the transfer is registered, the buyer has 30 days to pay the tax by submitting a Return on the Acquisition of a Beneficial Interest in Land form along with payment to the Ministry of Finance.
Land Transfer Tax – Rebate
Eligible first-time homebuyers in Ontario may receive a refund on all or part of the land transfer tax. For the first $368,000 on eligible homes, eligible first-time buyers pay no land transfer tax. After $368,000, the maximum refund is $4,000 for conveyances or dispositions that occur after January 1, 2017.
To claim a refund, the buyer must be a Canadian citizen or permanent resident, be at least 18 years of age, must not have owned a residential property or an interest in residential property anywhere in the world. This requirement on worldwide ownership also applies to the buyer’s spouse during the time he or she was their spouse.
The refund applies to all homes whether newly constructed or resale if the purchase agreement was entered after December 13, 2007. For purchases before December 14, 2007, the refund only applies for newly constructed homes.
To claim a refund, qualifying homebuyers must apply within 18 months after the registration of the transfer.
Non-Resident Speculation Tax
As of April 21, 2017, an additional 15% tax to the general Ontario Land Transfer Tax, applies on the purchase of residential property by individuals who are not citizens or permanent residents of Canada, known as the Non-Resident Speculation Tax (NRST). The additional tax also applies to foreign corporations and taxable trustees.
The NRST applies on the purchase or acquisition of residential property located in the following geographic areas: Toronto, Hamilton, Waterloo, Brant, Brantford, Dufferin, Guelph, Durham, Guelph, Haldimand County, Halton, Kawartha Lakes, Niagara, Northumberland, Orillia, Peel, Peterborough, Simcoe, York, and Wellington.
Non-Resident Speculation Tax – Exemptions
Exemptions to the 15% NRST apply. Certain eligible persons who qualify for an exemption must occupy the property as a principal residence. A foreign national who is nominated under the Ontario Immigration Nominee Program and has applied or certified that they will apply to become a permanent resident of Canada may be exempt. Furthermore, protected persons may be exempt. Foreign nationals who jointly purchase residential property with a spouse who is a Canadian citizen, permanent resident or who also falls within one of the exempt statuses mentioned, may be exempt.
Non-Resident Speculation Tax – Rebates
A rebate can be available in certain circumstances. Where a qualifying foreign national exclusively holds the property and has occupied the property as a principal resident within 60 days after the date of purchase, a rebate may apply. Rebates of the NRST may be available if the foreign national becomes a permanent resident of Canada within four years of the purchase date, the foreign national is an international student enrolled in full-time studies at least two years from the purchase date, or the foreign national is working in Ontario full-time under a valid work permit at least one year from the purchase date.
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This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.