How Do I Calculate Land Transfer Tax?

When buying real estate in Ontario, our clients often ask “how do I calculate land transfer tax?” Buying land or an interest in land in Ontario will likely require the payment of Land Transfer Tax.  For the purposes of LTT, any buildings, buildings to be constructed, and fixtures (such as light fixtures, built-in appliances and cabinetry) will likely be included

Who pays the tax and when is it required to be paid?

When you are buying a property or land, you are required to pay the land transfer tax and you pay when the transaction closes.  The amount you pay is normally based on the amount you pay for the property or land, and any mortgage or debt assumed as part of your agreement to buy the land or property.

Other times, LTT is based on the fair market value of the land.  For example:

• if it is for the transfer of a lease with a remaining term that can exceed 50 years
• if it is for the transfer of land from a corporation to one of its shareholders, or
• if it is for the transfer of land to a corporation, if shares of the corporation are issued.

Of course, there are always exemptions to these rules.  For a more detailed analysis feel free to speak with one of our professionals to determine whether there is an applicable exemption.

One such common exemption is for First-time homebuyers,.  For a first-time homebuyer, you may be eligible for a refund of all or part of the land transfer tax.

As always, there may also be other taxes owing.  For example, local municipalities charge a tax on the residential or business property you own. If you would like to talk about any applicable taxes on your purchase of land or real estate, feel free to contact one of the professionals of ConductLaw at our Ottawa office.

ConductLaw is an Ottawa based business law firm with locations in Ottawa, Barrhaven and Kanata.  Our professionals are experienced real estate lawyers who can help with commercial real estate, liens, incorporations, trademarking or implementing corporate structures that manage tax obligations, whether as a corporation, partnership, family trust, testamentary trust, or any other type of legal entity.

Feel free to call or write one of our professionals at info@conductlaw.com or 613.440.4888 for all of your business, commercial, real estate and estate planning needs