Sticker shock at closing is never fun. If you are buying in Toronto, land transfer tax can be one of your largest costs after the down payment. You want to understand it early so you can budget accurately and avoid surprises. In this guide, you will learn what Toronto’s land transfer taxes are, how they are calculated, where first-time buyer rebates may help, and how to plan your closing funds with confidence. Let’s dive in.
What land transfer tax is
Land transfer tax is a government tax paid when ownership of real property changes hands. In Ontario, the buyer pays the provincial land transfer tax. If the property is in the City of Toronto, the buyer also pays a separate municipal land transfer tax. Your lawyer collects these amounts in your closing funds and remits them at registration.
This tax is calculated on the consideration for the transfer. In most purchases that means the contract purchase price. For complex cases like assignments, transfers of beneficial interest, or related-party transactions, special valuation rules can apply. Your real estate lawyer can advise on those specifics.
Note: Figures and rules in this article reflect guidance current as of June 2024. Always confirm details with the Government of Ontario and the City of Toronto before you rely on numbers.
Who pays and when
You, as the buyer, are responsible for the provincial and municipal land transfer taxes unless your agreement states otherwise. Sellers do not receive a credit toward their next purchase.
The tax is due at closing when the transfer is registered. In practice, your lawyer calculates the tax, applies any eligible rebate, and sends payment to the province and the City of Toronto on your behalf.
How rates work in Toronto
Toronto buyers pay two separate taxes: the Ontario provincial LTT and the City of Toronto LTT. Each uses the same tiered bands for residential properties. You calculate each tax on the full purchase price, then add them together.
Provincial rates (Ontario)
- 0.5% on the first $55,000
- 1.0% on the portion from $55,000.01 to $250,000
- 1.5% on the portion from $250,000.01 to $400,000
- 2.0% on the portion from $400,000.01 to $2,000,000
- 2.5% on the portion above $2,000,000
City of Toronto rates
- The same bands and percentages as the province
- Applied separately and added to the provincial amount
A key takeaway: any portion of the price above $2,000,000 is taxed at 2.5% provincially and 2.5% municipally, for a combined 5% on that portion.
Example tax calculations
Below are four common price points to show how the math works. Each example shows the provincial total, the City of Toronto total, and the combined tax. Always re-calculate for your exact price.
Example A: $600,000 purchase
Provincial LTT
- 0.5% of first $55,000 = $275
- 1.0% of next $195,000 (55k–250k) = $1,950
- 1.5% of next $150,000 (250k–400k) = $2,250
- 2.0% of next $200,000 (400k–600k) = $4,000
- Provincial total = $8,475
City of Toronto LTT
- Same banding and result = $8,475
Combined LTT
- $8,475 + $8,475 = $16,950
Example B: $1,000,000 purchase
- Provincial LTT total = $16,475
- City of Toronto LTT = $16,475
- Combined LTT = $32,950
Example C: $1,500,000 purchase
- Provincial LTT total = $26,475
- City of Toronto LTT = $26,475
- Combined LTT = $52,950
Example D: $2,500,000 purchase
- Provincial LTT total = $48,975
- City of Toronto LTT = $48,975
- Combined LTT = $97,950
If you are eligible for first-time buyer rebates, your lawyer can subtract those from the provincial and municipal totals to show your net tax at closing.
First-time buyer rebates
Ontario and the City of Toronto each offer a first-time home buyer refund for eligible purchasers. These are separate programs with their own maximums and rules.
Common eligibility points include being a true first-time homebuyer, meeting age and residency requirements, and intending to occupy the home as your principal residence within a set period after closing. There are additional rules for newly built homes, assignments, or purchases through certain incentive programs.
Your lawyer usually applies the rebate at closing. If a rebate is claimed and later denied, the buyer or lawyer may need to repay the amount. Plan conservatively and treat any rebate as a bonus until your eligibility is confirmed.
Non-resident speculation tax
Ontario’s Non-Resident Speculation Tax may apply to certain residential purchases by non-resident buyers in the Greater Golden Horseshoe, which includes Toronto. This surcharge is separate from land transfer tax and can materially increase closing costs. The rate and exemptions can change. Confirm current rules on the Government of Ontario site if you are a non-resident buyer.
Closing costs to budget
Beyond land transfer tax, you should plan for several standard closing items. Exact amounts vary by property and lender requirements.
- Legal fees and disbursements: commonly $700 to $2,000, depending on complexity
- Title insurance: typically $200 to $500
- Home inspection: $300 to $700 (optional but recommended)
- Appraisal if required by lender: $300 to $600
- Mortgage default insurance: required if down payment is under 20%. The premium depends on loan-to-value and is often added to the mortgage rather than paid in cash
- Property tax and utility adjustments: prorated to the closing date
- Survey or other documentation if needed: variable
- Moving costs, hookups, immediate repairs: variable
For many Toronto purchases, excluding land transfer tax, a typical range for buyer closing costs is roughly $2,000 to $6,000. Land transfer tax is often the largest cash item at closing besides the down payment, especially for mid and high price points.
How payment works at closing
Your lawyer will confirm your final closing statement, including land transfer tax, a few days before completion. You provide the funds required to the lawyer’s trust account. On closing day, the lawyer registers the transfer, remits the land transfer taxes to the province and the City of Toronto, and releases funds to the seller.
If you qualify for rebates, your lawyer will apply them at this stage to reduce what is remitted. Keep your documentation ready so the process stays smooth.
Planning tips for first-time buyers
- Confirm your eligibility for both the provincial and City of Toronto first-time buyer rebates early. Ask what documents are needed so your lawyer can apply at closing.
- Budget as if you will not receive a rebate. If you do qualify, treat that saving as a buffer for moving costs or initial improvements.
- Keep a cash cushion for adjustments and last-minute items. Lenders generally do not finance land transfer tax within your mortgage, so you need cash available.
- If you are drawing on gifts or assistance for your down payment or closing costs, be ready to document the source to your lender.
Planning tips for move-up buyers
- There is no credit from your sale to offset land transfer tax on your purchase. The tax is based only on your new purchase price.
- If you need your sale proceeds to fund your down payment and land transfer tax, carefully coordinate sale and purchase closing dates.
- If dates do not align, speak with your lender about short-term solutions, such as bridge financing. Your lawyer can help you plan timelines that match registration and funding requirements.
- Include realistic financing and closing date conditions in your offers so you are not scrambling to assemble closing funds.
If you are buying over $2 million
The marginal tax rate jumps at $2,000,000. Every dollar above that threshold is taxed at 2.5% by Ontario and 2.5% by Toronto. That is a combined 5% on the portion above $2,000,000.
At luxury price points, this can be a six-figure line item. Add it to your budget early and ask your lawyer for an exact calculation once your offer price is set.
New builds and assignment purchases
Builders sometimes market incentives that cover part or all of your land transfer tax. Review the purchase agreement to see whether the builder is actually paying the tax or providing a closing credit that offsets your out-of-pocket costs.
Assignment sales and re-sales of pre-construction units can have different valuation rules for land transfer tax. Before you sign, have your lawyer confirm how the tax will be calculated for your specific transaction.
A smart budgeting approach
- Get a detailed estimate of your land transfer taxes at your target price range.
- Add your likely non-tax closing costs on top.
- Hold a contingency for prorations and small variances.
- Recalculate once you have an accepted offer price.
- Keep all documents ready for any first-time buyer rebate.
Planning this way gives you confidence during negotiations and removes stress at closing.
The bottom line
In Toronto, land transfer tax is a major part of your closing funds. You pay both the Ontario provincial tax and the City of Toronto tax, calculated in tiers on your purchase price. First-time buyer rebates can reduce your costs if you qualify. The cleanest path is to estimate the taxes early, confirm any rebate eligibility with your lawyer, and keep a cash buffer for closing day.
If you want a clear, personal walkthrough of your potential costs based on the neighborhoods and price points you are considering, reach out. Our team blends local insight with a concierge approach so you can move forward with confidence and no surprises. Book a complimentary consultation with Nicole Digalakis to plan your next steps.
FAQs
Who pays land transfer tax in Toronto?
- The buyer pays both the Ontario provincial land transfer tax and the separate City of Toronto land transfer tax at closing.
When is land transfer tax due in Ontario?
- It is payable at registration on closing. Your lawyer collects the funds and remits the taxes to the province and the City of Toronto.
Can I add land transfer tax to my mortgage?
- Generally no. Lenders typically require you to pay land transfer tax from your own funds at closing. Confirm any exceptions with your lender.
What rebates exist for first-time buyers in Toronto?
- Ontario and the City of Toronto each offer a first-time home buyer refund with their own caps and rules. Your lawyer usually applies the rebates at closing.
How much tax on a $1,000,000 Toronto home?
- The combined example total is $32,950, split as $16,475 provincial and $16,475 municipal. Always confirm your exact amount with your lawyer.
Do non-residents pay extra when buying in Toronto?
- The Ontario Non-Resident Speculation Tax may apply to certain residential purchases by non-resident buyers. Rules and rates can change, so verify current details.
Who handles the calculation and payment?
- Your real estate lawyer calculates the tax, applies any eligible rebate, and remits payment to the province and the City of Toronto at closing.
