How much will I pay for Land Transfer Tax?
The amount payable for Land Transfer Tax differs for each transaction and is determined by the location of the property, the price of the property, and whether any of the purchasers are first-time homebuyers. For example, if the home is located in Toronto, the City of Toronto levies a municipal tax in addition to the tax payable to the province. If at least one buyer is a first-time homebuyer, you will be entitled to a rebate of part of the tax amount. To view an estimate of what you can expect to pay as part of your purchase, please view our Land Transfer Tax Calculator.
How much is the Land Transfer Tax Rebate, and how do I qualify?
The maximum amount of the Ontario Land Transfer Tax Rebate is $4,000 and is applied to first-time homebuyers of newly constructed or resale homes. This means that a qualified person will not pay tax on the first $368,000 of their home. If two people are jointly purchasing the home and only one is considered a first-time homebuyer, the rebate would be reduced by 50%, to a maximum of $2,000.
The maximum value of the Municipal Land Transfer Tax Rebate in Toronto is $4,475. As with the provincial rebate, this will only apply to purchasers deemed first-time homebuyers.
To qualify as a first-time homebuyer for the provincial and municipal rebate programs, you must not have owned a home previously, or had any ownership in a home, anywhere in the world prior to your purchase. In addition, your spouse may not have had any ownership interest in a property anywhere in the world while they were your spouse.
To obtain an informational estimate of the land transfer tax payable on your purchase, please see our Land Transfer Tax Calculator.
Who should go on title?
“Going on title” refers to setting out the person or persons who will have a legal interest in a piece of property. In residential real estate transactions, it is most common for an individual purchaser to take title alone, or a pair of purchasers to take title as Joint Tenants. In some cases, however, the circumstances may dictate a different title structure.
If one spouse owns a business and personal liability is a concern, it may be wise for the other spouse to hold title alone to avoid putting the family home at risk. If the property is being purchased as an investment rental property by co-investors, it might make sense for the purchasers to take title as Tenants in Common.
Joint Tenants means that the owners hold title jointly so that if one person were to die, their share would automatically transfer to the other joint tenant by right of survivorship. This is most common when spouses or common-law partners purchase a home together.
Tenants in Common refers to a situation where owners each hold title to an individual share of the property. For example, if two people purchase a home as an investment and one person contributes 60% of the purchase price and the other contributes 40%, they can choose to split their ownership share to reflect their contributions. There is no right of survivorship in Tenants in Common, and each party can choose to sell or dispose of their share as they wish.
As your real estate lawyers, we will advise on the best way to take title of your new home given your unique circumstances.
What time will I get my keys on the closing date?
The handing over of keys to a new home is one of the final steps in closing a real estate transaction. While buyers are often anxious to get their keys as soon as possible on the closing date, the exact time often varies. Before we can hand keys over to our clients, we are required to ensure the following steps have taken place:
- The lending institution has released the funds for the purchase (assuming there is going to be a mortgage on the home), and the seller’s lawyer is in receipt of the funds.
- The transfer documents have been electronically registered with the province, confirming the buyer(s) as the new owner(s) of the property.
Once these steps have been completed, you can expect to get your keys. Generally, this will be at least midway through the closing day but could be closer to the end of the business day in some cases. Note that most Agreements of Purchase and Sale state that the vendor must provide vacant possession of the property by 6:00 pm on the closing date.
What time do I have to be out of the home on the closing date?
As stated above, the standard Agreement of Purchase and Sale states that the vendor will provide vacant possession of the property by 6:00 pm on the closing date, however, we encourage you to plan to be out of the home sooner than that. In some cases, a closing might be finalized as early as midday on the date of closing, and so the new owners could be given the keys at that time. To avoid frustration for both parties, we advise clients to have their possessions out of the home as early as possible in advance of or on the closing day.
Who sets up my utilities in my new home?
While our office will provide notification of the change in ownership upon closing, we advise you to contact the utility companies in advance of the closing date to let them know of the pending change in order to avoid an interruption in service.
Who advises the municipality of the change in ownership of my home?
You should notify all utilities of the change of ownership date in advance; however, we will confirm the change upon closing by sending each utility a letter of notification.
Who arranges property insurance for my new home?
You will be required to arrange for home insurance in advance of the closing. Your insurance company will also need to provide our office with a document called an “insurance binder” to confirm insurance in advance of the closing. Your mortgage lender, if applicable, will require this document prior to the release of the funds needed for closing. We will include it along with the other documents we prepare on the lender’s behalf.