In the first video in our new series, Barriston Briefs, Jennifer Craddock discusses how to deal with various taxes in your real estate deal. Types of taxes include property taxes, land transfer taxes and HST.
As the saying goes there’s two things in life that are certain death and taxes.
We’re going to talk about taxes and how they relate to your real estate transaction. So there’s generally three types of taxes that could impact your transaction. The first would be municipal property taxes the lawyers on your transaction will make sure that the property taxes are adjusted so that each party only pays their proportionate share of the taxes relating to their property. The next kind of tax that we’re going to talk about is land transfer tax this is a larger tax and it’s payable whenever a transfer is registered in the province of Ontario. The amount of tax that you’ll be required to pay is based on the purchase price so the higher the price the more tax you’re going to be required to pay. Depending on the nature of the transaction and the relationship with the parties sometimes the transaction could be exempt from land transfer tax. It’s really important that you discuss all of the facts related to your transaction with your real estate lawyer so that they can properly inform you as to the amount of tax that would be payable and any exemptions that you might qualify for. The other tax that could have an impact on your real estate transaction is HST, the HST does not apply to most sales of use residential property, however, the issue can become more complicated if you’re selling vacant land or property that has a commercial component. In any event, the HST needs to be an address at the outset of the transaction when the parties are negotiating the agreement of purchase and sale. If you’re unsure about whether HST is applicable to your transaction you should make sure that you consult your lawyer first.
In any event at end of the day, it’s really important that your real estate where is well-versed in the tax issues that can impact your real estate transaction.