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Land Transfer Tax Rebates

Find out if you qualify for a land transfer tax rebate and the amount you could receive.

By Emily Southey | 6 minute read

Dec 20

Qualifying for a land transfer tax rebate in Canada can save you money on your upcoming home purchase. Read on to learn more about how to qualify for one and how much you could receive. 

What Is a land transfer tax (LTT) rebate?

First things first — what is a land transfer tax (LTT), and what is a land transfer tax rebate? Land transfer tax, also referred to as property transfer tax (PTT), is a type of tax that most provinces and territories (with the exception of Alberta, Saskatchewan, Nunavut, and Yukon) collect. This tax is paid to the province or territory in which you reside. Certain municipalities, such as Toronto, collect an additional municipal land transfer tax on top of the provincial LTT. 

In Ontario, there is a multi-tiered system to calculate LTT. For example, on a $500,000 home in Ontario (located outside the municipality of Toronto), a 0.5% LTT is paid on the first $55,000, 1% on the next $195,000, 1.5% on the next 150,000, and 2% on the final $100,000. This equals an LTT of $6,475. 

As you can see in the example above, land transfer tax adds up quickly. And with so many other expenses that come with home ownership, it makes sense that homeowners want to reduce these costs as much as possible. There’s where LTT rebates come in. One of the most effective ways of reducing how much you pay for a new home is by claiming land transfer tax rebates. Some cities and provinces, like both Toronto and Ontario, offer rebates to first-time homebuyers that allow you to earn some of the tax money back.

How to Qualify for a Land Transfer Tax Rebate

The qualifications for a land transfer tax rebate vary from province to province. First of all, you will only qualify for an LTT rebate if you live in Ontario, British Columbia, or Prince Edward Island. You may also qualify for an LTT rebate if you live in the municipality of Toronto. 

In most cases, to claim an LTT rebate, you must be a first-time homebuyer, meaning you’ve never owned a property before. Therefore, this rebate can only be claimed once. We outline some of the other qualifications that must be met in each province or municipality below.

“The qualifications for a land transfer tax rebate vary from province to province. First of all, you will only qualify for an LTT rebate if you live in Ontario, British Columbia, or Prince Edward Island. You may also qualify for an LTT rebate if you live in the municipality of Toronto.”

Ontario

Ontario’s First-Time Home Buyer Incentive is a program run by the Government of Ontario that offers a land transfer tax refund of up to $4,000 to first-time homebuyers. It applies to resale homes, as well as new construction homes. To qualify for the province’s First-Time Home Buyer Incentive, you must meet the following criteria:

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  • You must be a first-time homebuyer who has not previously owned a home anywhere in the world;
  • Your spouse or common-law partner must also not have owned a home, and neither of you can have an interest or stake in a home;
  • You must be 18 years of age; and
  • You must be a Canadian citizen or a permanent resident.

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Those who are eligible can apply for the rebate within 18 months of the transfer date. As the maximum payout is $4,000, Ontario’s First-Time Home Buyer tax rebate only covers the full amount of LTT for homes up to $363,333. For homes that cost more than this amount, the homeowner will be responsible for paying anything beyond the maximum ($4,000) rebate. It’s also worth noting that if you are buying a house with a spouse who is not a first-time homebuyer, you may still be eligible for a partial rebate of 50% (to a maximum of $2,000). 

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Toronto

As mentioned, the City of Toronto collects a municipal land transfer tax on top of the one that the provincial government collects. Thankfully, it also offers an LTT tax rebate to first-time homebuyers. Toronto’s First-Time Home Buyer Incentive is a program that offers a rebate on the city’s municipal land transfer tax to a maximum of $4,475. It is available to buyers who purchase new construction or resale residential properties. To qualify for the city’s First-Time Home Buyer Incentive, you must meet the same requirements as Ontario’s First-Time Home Buyer Incentive program, with the additional requirement that the property must be located in the municipality of Toronto. To reiterate, the qualifications for Toronto’s First-Time Home Buyer Incentive are:

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  • You must be a first-time homebuyer who has not previously owned a home anywhere in the world;
  • Your spouse or common-law partner must also not have owned a home, and neither of you can have an interest or stake in a home;
  • You must be 18 years of age; 
  • Your property must be located in the municipality of Toronto; and
  • You must be a Canadian citizen or a permanent resident.

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It’s important to note that Toronto’s First-Time Home Buyer Incentive program and Ontario’s First-Time Home Buyer Incentive program can be used in conjunction. Therefore, first-time buyers who purchase homes in Toronto can receive a rebate of up to $4,475 on their municipal land transfer tax and up to $4,000 on their provincial land transfer tax, for a total of $8,475 in savings.

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British Columbia

Qualifying for a land transfer tax rebate in British Columbia is a little different than in Ontario. First, you must be a Canadian citizen or permanent resident and the property you’re buying must be used as your principal residence. (Note that if you are not a citizen or permanent resident at the time of purchase but you become one by the first anniversary of the registration date, you may apply to receive the PTT refund). Next, you must have lived in British Columbia for 12 consecutive months before buying the property, or you must have filed no less than two income tax returns in British Columbia within the last six years. You must also move into the property within 92 days of buying it to qualify. 

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The amount of money you can receive in British Columbia will ultimately depend on the size and price of your property, however, the maximum amount is $8,000. If you purchase a home under $500,000, the PTT rebate will cover the full amount, leaving you with no transfer tax to pay. However, if the home is between $500,000 and $524,999, you can apply for a partial rebate. Please note that there are no transfer tax rebates available on homes above $525,000 in British Columbia.

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Prince Edward Island

Like British Columbia and Ontario, P.E.I. also offers a land transfer tax rebate with a maximum amount of $2,000. To qualify, you must be a first-time homebuyer, have lived in the province for six consecutive months before moving into the property (or filed two income tax returns in P.E.I. in the last six years), be over 18 years of age, and be a Canadian citizen or permanent resident.  

Frequently Asked Questions

How does co-ownership affect a land transfer tax rebate in Canada?

Co-ownership can affect the land transfer tax rebate in Canada if the person you co-own the property with is not a first-time homebuyer. Further, whether they are your spouse or not and whether they are a Canadian citizen or have permanent residency can also impact the land transfer tax rebate. That said, even in cases where one homeowner is not a first-time buyer and the other is, you may still qualify for a reduced rebate (for example, 50% of the amount you would have otherwise received through Ontario’s First-Time Home Buyer Incentive). 

Is the land transfer tax rebate different depending on the province?

Yes, land transfer tax rebates vary from province to province. Currently, only three Canadian provinces offer land transfer tax rebates: British Columbia, Ontario, and Prince Edward Island. However, some municipalities, such as the City of Toronto, offer land transfer tax rebates on top of the provincial land transfer tax rebates. Using this example, a homebuyer in Toronto who qualifies for both Toronto’s and Ontario’s First-Time Home Buyer Incentive programs can receive up to $8,475 in LTT rebates. 

How long does it take to receive the land transfer tax rebate if you qualify?

To take advantage of a land transfer tax rebate, you must apply for the rebate within 18 months of the registration date. How long it will take to receive the land transfer tax rebate ultimately depends on your province and your preferred payment method. 

Emily Southey

Wahi Writer

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