City Announces Details of Toronto's New Land Transfer Tax

As we previously discussed, Toronto City Council has approved a new, municipal Land Transfer Tax. Effective, February 1, 2008, the tax will be payable by purchasers of homes and other property within the City.

The new tax will be payable in addition to the existing Provincial land transfer taxes that are currently imposed throughout Ontario.

Details on the new Toronto Land Transfer Tax are now available on the City of Toronto Website. As of February 1, 2008, the following new municipal land transfer taxes will be payable by purchasers of property in Toronto:

• 0.5% of the value of the consideration on sales up to and including $55,000;
• 1% of the value of the consideration on sales exceeding $55,000 up to and including $400,000;
• 2 % of the value of the consideration of land containing one and/or two single family residences exceeding $400,000;
• 1.5 % of the value of the consideration on commercial properties including multi-residential units exceeding $400,000 up to $40 million;
• 1% of the value of the consideration which exceeds $40 million.

According to a recent City of Toronto news release, the following purchasers will be exempt from the new land transfer tax:

• Where the net revenue after transaction fees would result in revenue to the City of less than $2.00, the purchase would be exempt from the Toronto Land Transfer Tax.
• Purchasers with a Purchase and Sale agreement on or before December 31, 2007 will receive a full rebate of the Toronto Land Transfer tax regardless of the closing date.
• Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing before February 1, 2008 will not be required to pay the Toronto Land Transfer tax.

A special land transfer tax rebate provision has been included for first time home buyers as follows:

A rebate of up to $3,725 will apply to first-time purchasers of both new and existing homes. This means a full rebate for first-time buyers of homes valued at $400,000 or less. For example, a first-time purchaser of a home valued at $600,000 would pay land transfer tax according to the scale shown above, and receive a rebate of $3,725. A first time home buyer of a home valued at $300,000 would get a full rebate on the land transfer tax.

- Annie Noa Kenet, Toronto

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