Land transfer tax is a provincial tax which is levied on the purchase of real property, exclusive of chattels.  When you purchase a property, your lawyer will complete a land transfer tax affidavit on your behalf, stating the following (this list is not exhaustive):

1. the names of the transferor(s);

2. the names of the transferee(s);

3. the legal description of the property;

4. the consideration for the transaction (amount paid for the property), including any assumed mortgages, mortgage-back, property transferred in exchange, etc.; and

5. number of single family residences (if consideration is over $400,000.00).

The consideration is necessary in order to calculate the amount of land transfer tax payable for each transaction.  Once the total amount of consideration is calculated on the land transfer tax affidavit, the land transfer tax amount is calculated as follows:

• 1/2 of 1% on the first $55,000.00;

• 1% on the amount from $55,000.01 to $250,000.00;

• 1 1/2% on the amount from $250,000.01 to $400,000.00; and

• 2% on the amount over $400,000.00, if there are at least one and not more than two single-family residences on the property.  Otherwise, the amount over $400,000.00 is calculated at 1 1/2%.

As a shortcut, you could calculate your own land transfer tax using the following formulas:

• for a total consideration of $55,000.00 or less, multiply the amount by 0.005;

• for a total consideration of $250,000.00 or less, multiply the amount by 0.01 and subtract $275.00;

• for a total consideration of $400,000.00 or less, multiply the amount by 0.015 and subtract $1,525.00;

• for a total consideration of over $400,000.00 and if the property does not contain at least one and not more than two single-family residences, multiply the amount by 0.015 and subtract $1,525.00; and

• for a total consideration of over $400,000.00 and if the property does contain at least one and not more than two single-family residences, multiply the amount by 0.02 and subtract $3,525.00.

Here are some examples of purchase prices and their respective land transfer tax amounts:

1. a total consideration of $48,000.00 would generate a land transfer tax amount of $240.00 (1st example above);

2. a total consideration of $120,000.00 would generate a land transfer tax amount of $925.00 (2nd example above);

3. a total consideration of $300,000.00 would generate a land transfer tax amount of $2,975.00 (3rd example above);

4. a total consideration of a property not containing one or two single-family residences of $450,000.00 would generate a land transfer tax amount of $5,225.00 (4th example above); and

5. a total consideration of a property containing one or two single-family residences of $450,000.00 would generate a land transfer tax amount of $5,475.00 (last example above).

Remember that land transfer tax is payable on the day of closing and that you will need to provide your lawyer with this amount in addition to the remainder of the purchase price (subject to adjustments and any mortgages) and legal fees and disbursements.

Click here to view our archived articles.