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Land Transfer Tax & Vacant Home Tax in Toronto: What Buyers Need to Know

Land Transfer Tax & Vacant Home Tax in Toronto: What Buyers Need to Know"

When buying a property in Ontario, particularly in Toronto, buyers are required to pay Land Transfer tax. This tax is not paid by the seller, but rather by the buyer’s lawyer when the deed to the new home is transferred in the buyer’s name on closing day.

First-time homebuyers in Ontario may be eligible for a refund of land-transfer tax through the Land Transfer Tax Refund Program. The amount of land transfer tax in Toronto and Ontario is based on a sliding scale and is calculated based on the value of the property.

In Ontario, the tax ranges from 0.5% to 2.5% of the property value, depending on the amount. In Toronto, the tax ranges from 0.5% to 2.5% of the property value, with higher rates for higher values. A Land Transfer Calculator can be used to estimate the amount of land transfer tax that will be due.

The Canadian sales taxes include the Provincial Sales Tax (PST), the Quebec Sales Tax (QST), the Goods and Services Tax (GST), and the Harmonized Sales Tax (HST) which is a combination of the provincial sales tax portion and the GST in some provinces.

An eligible new home buyer can claim a rebate of the PST & GST

If you buy the property as your principal residence, the New Home Rebate is typically assigned to the Developer who automatically credits the buyer with the rebate amount so that you don’t pay anything out of pocket. However if you are an investor, you have to pay the rebate amount upfront – so if you rent out the property for at least 1 year, you will be eligible to get the entire rebate amount back

In Ontario, Canada, when you buy a new house, you have to pay a 13% tax called HST, which is made up of an 8% provincial tax (PST) and a 5% federal tax (GST). Generally, buyers are eligible to receive a rebate of 75% of the PST paid, up to a maximum of $24,000, and a rebate of 36% of the GST paid on homes costing $350,000 or less.

The rebate for GST decreases on a sliding scale for homes costing between $350,000 and $450,000, and there is no rebate for GST on homes costing more than $450,000.

Toronto’s Vacant Home Tax: What You Need to Know

Toronto’s vacant home tax went into effect this year and will apply to residential properties that sat vacant for more than six months of the previous tax year. If a property owner declares the property vacant or fails to complete the declaration, a tax of one percent of the home’s assessed value would be applied to property tax bills starting in the spring.

However, there are a number of exemptions available, including if the principal resident died or had to be placed in a hospital or long-term care facility for more than half the year, and repairs and renovations that city officials believe are being “actively carried out without unnecessary delay.” All homeowners should have already received a notice in the mail and are required to submit their declaration by February 2, 2023.

Owners who fail to complete the form by this deadline will still be able to make a late declaration, but could face a fine of at least $250. The city has estimated that the tax could bring in between $55 and $66 million annually, with the money being directed towards affordable housing initiatives.

However, the success of the tax will depend on whether it convinces some owners to rent or list their properties for sale. It is unclear how many vacant homes exist in Toronto, but a 2017 staff report estimated that there could be 15,000 to 28,000 vacant residential units in the city.

Opponents of the tax argue that it is confusing and won’t ultimately have a big impact on boosting housing stock or will not significantly increase housing supply in the city, which is facing an affordability crisis.

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Arsh Syed, a real estate agent in Toronto, offers services to help property owners buy, sell, or rent their homes and manage the transaction.

He aims to establish relationships and provide exceptional service to improve the housing crisis in Toronto. By hiring him, property owners can reduce risks, save time, and save money.

For more information about his services, you can visit or contact (416) 844-2217.

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