So you’ve finally bought a place. Congratulations! Especially heartfelt congrats to those first-time buyers out there. It’s not easy but at least it makes for good conversation… after the fact.
I know it must have felt like a never-ending roller-coaster where there were far more downs than ups – but you made it in the end. It’s over now.
… and now is when the real work starts. Time to pay attention.
The Good News (kind of).
The (slightly) good news for those first-time buyers is that you may qualify for up to $4,000.00 off the total amount of Land Transfer Tax (LTT) owing on your purchase (with the exception of those living in Toronto, where the amount is calculated differently; everywhere else in the province, it’s the same). LTT is not a scam and is a real tax in the province of Ontario, I promise. It’s calculated based on the total purchase price paid (i.e., the more expensive the property, the more LTT you will have to pay at time of closing). Your real estate lawyer will calculate the exact amount you owe and ensure it is paid correctly as part of the closing process of your real estate transaction.
Please educate yourself on LTT before you start looking at properties; after all, you want to avoid having a nasty surprise that you didn’t (and don’t have the) budget for. Don’t be afraid to ask your Realtor about LTT. Be informed and go in with your eyes open. For example, on a property (not in Toronto) with a final purchase price of $500,000.00, the total amount of LTT owing (before any rebate) is: $6,475.00.
If you buy for $700,000.00, you will owe $10,475.00 in LTT; a $1M home will cost $16,475.00 in LTT.
That’s not insignificant… hence why we’re having this little chat.
So How Do I Get The LTT Rebate?!
For your benefit, I have included an LTT calculator on my website, located here https://www.ratehub.ca/land-transfer-tax-ontario . Granted, it’s not as much fun as the vehicle configurator featured here [https://www.porsche.com/canada/en/ but likely more useful in the end. Enjoy!
So, do you qualify for the LTT rebate? A penny saved, is a penny earned, after all.
In order to be eligible for these savings, you must:
- Be a Canadian citizen;
- over 18 years of age;
- be a first-time home buyer (seems obvious but you wouldn’t believe the questions we get about this; you cannot have bought ANYTHING at ANYTIME, ANWHERE IN THE WORLD – even a long time ago in a different country, that you since may or may not have sold), and;
- Have to occupy (and live) in the property after closing.*
*clarify these points with your real estate lawyer; there may be regulations around losing eligibility for the LTT rebate if your first-time property purchase is actually an income property (i.e., you rent it out and you do not live in it – and in this case, you may owe HST on the purchase also – BE WARNED!); also, you may have to occupy the property within a certain period of time from closing (i.e., from the date upon which you take possession/ownership). Again, always consult a real estate lawyer to obtain clarify on these issues. Better to know well ahead of time rather than late in the afternoon on the day of closing.
The only other (rather thorny) issue to contemplate is that a partner will lose their eligibility for the LTT rebate if they marry someone who has already purchased a property (i.e. who has already used up their first-time credits) and who did not sell it before getting married. In this scenario, where two people are married (one a first-time homebuyer and the other, not) the government considers you one entity who has used up their credit. Sorry.
Now, if the one partner sells their property before getting married and both partners then buy one property together, the other, first-time homebuyer spouse is able to use up to 50% of their $4,000.00 (i.e., up to $2,000.00) of their LTT rebate.
Still confused? Call me.
I’m a Realtor. I know things and can help. Let’s find you a place together.