Buying in East York or nearby and wondering why your closing costs feel higher than expected? For most Toronto buyers, land transfer tax is the line that surprises them. You want a clear, simple way to estimate it, see where rebates apply, and plan your cash for closing. This guide breaks down Toronto’s land transfer tax step by step, with East‑end price examples and first‑time buyer rebates so you can budget with confidence. Let’s dive in.
What land transfer tax covers
Land transfer tax (LTT) is a one‑time tax on the purchase of land or an interest in land. In Toronto, you normally pay two LTTs: the Ontario provincial LTT and the City of Toronto municipal LTT. Your lawyer collects the funds and pays the tax when the transfer is registered at closing.
LTT is separate from other closing costs like legal fees, title insurance, adjustments, HST on new builds, mortgage default insurance, and home inspections. Plan for LTT as a cash item at closing. It is not typically added to your mortgage.
Toronto LTT rates at a glance
Toronto buyers pay both the provincial and the municipal LTT, each calculated using the same tiered rates on the purchase price:
- 0.5% on the portion up to $55,000
- 1.0% on the portion over $55,000 up to $250,000
- 1.5% on the portion over $250,000 up to $400,000
- 2.0% on the portion over $400,000 up to $2,000,000
- 2.5% on the portion over $2,000,000
Because the City uses the same schedule as the province, your combined LTT is the provincial calculation plus the municipal calculation. In practical terms, the combined total is roughly double the provincial amount.
How to calculate your LTT
- Break your price into the bands above.
- Multiply each portion by the band’s rate.
- Add up the results for the provincial LTT.
- Calculate the City of Toronto LTT using the same bands.
- Add provincial and municipal totals for your combined LTT.
Example for an $800,000 purchase:
- Provincial LTT: $12,475
- Municipal LTT: $12,475
- Combined LTT: $24,950
Your lawyer will prepare the official forms and confirm the final amount before closing.
East‑end price examples
Here are rounded figures for common East‑end price points, using the rates above. “Combined” means provincial plus City of Toronto.
$400,000
- Provincial: $4,475
- Municipal: $4,475
- Combined: $8,950
- Effective rate: about 2.24%
$600,000
- Provincial: $8,475
- Municipal: $8,475
- Combined: $16,950
- Effective rate: about 2.83%
$800,000
- Provincial: $12,475
- Municipal: $12,475
- Combined: $24,950
- Effective rate: about 3.12%
$1,000,000
- Provincial: $16,475
- Municipal: $16,475
- Combined: $32,950
- Effective rate: about 3.30%
$1,500,000
- Provincial: $28,475
- Municipal: $28,475
- Combined: $56,950
- Effective rate: about 3.80%
Key takeaway for East York buyers: for many mid‑market purchases in the $600,000 to $1,000,000 range, expect combined LTT of roughly 2.8% to 3.3% of the price. The effective percentage climbs at higher price points as more of the price falls into the 2.0% band.
First‑time buyer rebates in Toronto
If you are a first‑time buyer, two refunds can reduce what you pay at closing:
- Ontario refund: up to $4,000 toward the provincial LTT
- City of Toronto rebate: up to $4,475 toward the municipal LTT
- Combined potential: up to about $8,475 if you qualify for both
Who typically qualifies
- You are a true first‑time homebuyer and have not owned an owner‑occupied home anywhere.
- You are at least 18 years old.
- You will occupy the home as your principal residence within the period stated on the forms.
- All purchasers must qualify to receive the full amount when buying together.
- Some transfer types have specific rules or are not eligible.
- Non‑residents may face different rules and may not be eligible for refunds.
How refunds are claimed
Your lawyer usually files the provincial affidavit and City of Toronto declaration at closing so the rebates reduce the funds you need that day. If you do not claim at closing, both levels of government have refund processes you can apply to later. Expect to provide ID, signed declarations, the transfer deed or statement of adjustments, and proof of occupancy intent. Timelines vary.
Note: Federal programs like the Home Buyers’ Amount are separate and do not reduce LTT at closing.
What this means for your budget
On an $800,000 East‑end purchase, the combined LTT is $24,950. If you qualify for the full provincial and municipal refunds, the potential reduction is up to $8,475, bringing your net LTT to $16,475. Actual refunds cannot exceed the tax calculated for each level.
Special cases and exemptions
Every situation is different, but these are common scenarios to discuss with your lawyer:
- Transfers between spouses or common‑law partners may be exempt.
- Registered charities, public authorities, and some housing organizations may be exempt.
- Assignment sales and newly built homes can have different rules. HST and builder rebates are separate from LTT.
- Corporate purchases, non‑residential property, and non‑resident buyers can face different tax treatment or surtaxes in some areas.
- If you are buying jointly, confirm each purchaser’s status. First‑time buyer rebates depend on every buyer’s eligibility.
Closing costs beyond LTT
LTT is one part of your closing budget. Also plan for:
- Legal fees
- Title insurance
- Adjustments with the seller
- HST on new construction, if applicable
- Mortgage default insurance, if applicable
- Home inspection or related due‑diligence costs
Your lawyer can provide a written closing statement well before your closing date so you know the final amounts.
Smart planning tips for East York buyers
- Budget LTT as cash at closing, separate from your down payment.
- As a rule of thumb for mid‑market Toronto purchases, set aside about 3% of the purchase price for combined LTT, and adjust upward for higher prices.
- Confirm first‑time buyer eligibility early and have your lawyer file the declarations so refunds apply at closing.
- Keep copies of your signed affidavits, ID, and closing documents. They are helpful if a post‑closing refund is needed.
- If you are a non‑resident or your ownership history is complex, speak with your lawyer before firming up an offer.
Ready to plan your purchase
If you are starting your East York or east‑central Toronto search, you deserve clear numbers and a calm plan. We will help you price out LTT, map first‑time buyer rebates, and align your closing budget with the right homes in your target streets. When you are ready, connect with Derek Ladouceur for local guidance from search to keys.
FAQs
What is land transfer tax in Toronto and who pays it?
- LTT is a one‑time tax paid by the buyer on closing, and in Toronto you normally pay both the Ontario provincial LTT and the City of Toronto municipal LTT.
When is land transfer tax due in Toronto?
- It is due at closing when the transfer is registered; your lawyer collects the funds and remits the tax as part of the registration process.
How do I estimate land transfer tax on an $800,000 East York home?
- Using the tiered rates, provincial LTT is $12,475 and the municipal LTT is $12,475, for a combined total of $24,950.
Can I add Toronto land transfer tax to my mortgage?
- LTT is typically a cash requirement at closing and is not generally added to your mortgage.
How do first‑time buyer rebates work in Toronto?
- Qualifying first‑time buyers can receive up to $4,000 off provincial LTT and up to $4,475 off municipal LTT, potentially reducing combined LTT by about $8,475.
What if my co‑buyer is not a first‑time buyer?
- For the full rebate amounts, each purchaser must meet first‑time buyer criteria; mixed eligibility can reduce the rebate available.
Are spousal transfers exempt from land transfer tax?
- Transfers between spouses or common‑law partners are commonly exempt, but confirm specifics with your lawyer for your situation.
