Usually when you buy land or an interest in land in Ontario, you pay land transfer tax, which is a tax charged by the Ontario government. First-time homebuyers, however, may be eligible for a refund of all or part of the tax.
To claim a refund, you must be at least 18 years of age, you cannot have owned a home or an interest in a home anywhere in the world, and your spouse cannot have owned a home or interest in a home, anywhere in the world while he or she was your spouse.
You can apply for a land transfer tax “refund” at time of registration which basically means you do not have to pay the amount of the refund on closing.
The maximum amount of the refund is $4,000 so no land transfer tax would be payable by qualifying first‑time purchasers on the first $368,000 of the value of the consideration for eligible homes. First‑time purchasers of homes greater than $368,000 would receive a maximum refund of $4,000.
The refund is reduced if one (or more) of the purchasers is not a first‑time homebuyer. The refund will be proportionate to the interest acquired by the individuals who qualify for the refund.
You can find out how much land transfer tax is on a potential purchase in Ontario (not including properties in the GTA which have another additional tax) with our handy calculator here.
For more on the costs and process of buying your first home, contact us.
Joanne McPhail, Co-Managing Partner