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The New Toronto Land Transfer Tax

 

Considering buying a home in Toronto in 2008?

For a home costing $525,000, you could be hit with  something like $6,000 in additional land transfer taxes.

If you can, you should either:

bulletmake sure there's an executed purchase and sale agreement dated on or before Dec 31-07
bulletmake sure to close before Feb 1-08

 

Here's information about the new Toronto Land Transfer Tax that will take effect in 2008.


Municipal Land Transfer Tax

A new Municipal Land Transfer Tax becomes  effective February 1, 2008.

This will apply to all purchases of homes--as well as commercial and industrial property, it seems-- in the city of Toronto..

The Municipal Land Transfer Tax (MLTT) will be charged on properties purchased in Toronto with  closing dates on or after February 1, 2008.

Your lawyer will register your property transaction and at that time your MLTT will be collected.


Transition Rules: If your Purchase & Sale Agreement is executed on or before December 31, 2007 you are eligible for a full rebate.

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Municipal Land Transfer Tax Rates
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The MLTT will be charged on a graduated basis depending on the value of consideration paid for the property.

For property containing at least one, and not more than two, single family residences:

Value of Consideration MLTT Rate
Up to and including $55,000 0.5% plus
Over $55,000.00 to $400,000 1.0% plus
Over $400,000 2.0%



For all other property: Value of Consideration MLTT Rate
Up to and including $55,000 0.5% plus
Over $55,000.00 to $400,000 1.0% plus
Over $400,000.00 to $40,000,000 1.5% plus
Over $40,000,000 1.0%


EXAMPLE: Calculation of the MLTT for a home with a $500, 000 (excluding GST) value of consideration:

MLTT Rate Calculation
0 to $55,000 at 0.5% 55,000 x 0.005 = $275.00
$55,000 to $400,000 at 1% $400,000 - $55,000 x 0.01=$3,450.00
$400,000 to $500,000 $500,000 - $400,000 x 0.02=$2,000.00
Total MLTT= $5,725.00



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Rebate Opportunities
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You may be eligible for a rebate of the MLTT if the following criteria is met:
Grand-Fathering
The Agreement of Purchase & Sale was executed on or before December 31, 2007 and the closing date is on or after February 1, 2008. In this case you will be eligible for a full rebate.


First-Time Purchaser
You are a first-time purchaser of a newly constructed or re-sale residential property with two or less single-family residences. The rebate for first-time purchasers is up to a maximum of $3,725.00.

If you are eligible for a rebate of the entire amount of MLTT you owe, you will receive an automatic rebate when your lawyer registers your property transaction and will not have to pay the tax.

If you are eligible for a rebate for a only a portion of the MLTT, the full tax will be collected at the time your lawyer registers your property transaction. Once your lawyer submits your rebate application form and affidavit a cheque for the rebated amount will be sent to the purchaser.

All rebates will be automatically deducted from the MLTT owing at the time your property is registered starting in the Summer 2008.


















 

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Copyright 2013 B.C. Chastkofsky C.A.
Last modified: January 01, 2013