Real Estate

Toronto Land Transfer Tax: What It Is And How to Calculate

Toronto Land Transfer Tax: What It Is And How to Calculate
Written by
  • Alivia Massimillo
| 29 March 2023
Reviewed, 31 August 2023

Table of contents

    In 2008, the City of Toronto first introduced an additional land transfer tax that applies to all homes within the amalgamated Toronto city limits defined as – south of Steeles to Lake Ontario, East of Etobicoke, York, and West of Scarborough Pickering Townline. 

    This tax is called the Toronto Municipal Land Transfer Tax (MLTT) and was introduced as a way for the city to raise more money for its budget. This tax is about 5% of the city’s budget and has since helped fund many municipal projects and programs. The Toronto land transfer tax applies to new builds and resale homes. 

    Key Takeaways

    • Toronto Municipal Land Transfer Tax (MLTT) tiers mirror the Ontario Land Transfer Tax (LTT). 
    • Properties purchased in the City of Toronto are subject to provincial and municipal land transfer taxes. 
    • The MLTT is charged marginally on the property’s purchase price. 

    Calculate Your Toronto Land Transfer Tax  

    Using a Toronto land transfer tax calculator is the easiest way to find out exactly how much you should be budgeting for your closing costs and how much you can save with the various rebates available when purchasing your home. 

    To accurately calculate the Toronto Land Transfer tax, you must know the purchase price of the home as well as it’s important to remember if you’re a first-time homebuyer to say yes to that question – as rebates will apply to lower the amount owed for first-time buyers. 

    Once you’ve verified that the information you’ve entered is accurate, the land transfer tax calculator for Toronto will automatically show you the completed calculation of the land transfer tax owed and the amount of any rebates you may qualify for. 

    Costs Associated with Land Transfer Tax in Toronto?

    The cost of land transfer tax in Toronto is calculated on the home’s purchase price. The higher the purchase price, the higher the rate will be. This rate is calculated using a marginal tax rate system – based on the home’s purchase price – meaning the higher the property’s purchase price, the higher the land transfer tax. 

    These rates start at 0.5% for purchases up to $55,000 and increase to 2.5% for purchases equal to or more than $2,000,000. If you’re looking to purchase a home in Toronto, it’s important to note that you will end up paying double land transfer tax fees compared to elsewhere in Ontario. This is due to the requirement to pay the Ontario Land Transfer Tax and the Toronto Land Transfer Tax doubling the amount owed. 

    Here’s a breakdown of Toronto Land Transfer Tax Rates

    The Toronto Land Transfer Tax is calculated as a percentage based on the purchase price of your home. The charts below outline how much land transfer tax you must pay based on the type of home and the purchase price. 

    For properties that contain at least one but not more than two single-family residences: 

    Value of Property MLTT Tax Rate
    Up to and including $55,000 0.5%
    $55,000.01 to $250,000 1.0%
    $250,000.01 to $400,000 1.5%
    $400,000.01 to $2,000,000 2.0%
    $2,000,000.01 +  2.5%

    [Marginal tax rates for Toronto MLTT for single-family homes. Source: City of Toronto MLTT.]

    For all other non-single family residences:

    Value of Property MLTT Tax Rate
    Up to and including $55,000 0.5%
    $55,000.01 to $250,000 1.0%
    $250,000.01 to $400,000 1.5%
    $400,000.01 + 2.0%

    [Marginal tax rates for Toronto MLTT for non-single family homes including condos. Source: City of Toronto MLTT.]

    Toronto Land Transfer Tax Example ($1,000,000 Purchase Price)

    Let’s say you are looking to purchase a home in Toronto with a purchase price of $1,000,000.

    Using the Toronto land transfer tax calculator, you can anticipate paying the total Land Transfer Taxes of $32,950 ($16,475 for provincial and municipal land transfer taxes). So just how is this figure calculated? Here’s the breakdown:

    $55,000 x 0.5% =  $275
    $194,999.99 x 1% =  $1950
    $149,999.99 x 1.5% =  $2250
    $599,999.99 x 2% =  $12,000
    Total MLTT =  $16,475

    Using the same example above, first time home buyers that qualify for the first time home buyers rebate will pay a total of $24,475 in land transfer taxes (when the maximum rebate of $4,000 is applied to the provincial portion and $4,475 is applied to the municipal portion). 

    What are some historical changes to the Toronto Tax?

    In 2017 the city’s municipal land transfer tax rates were revised and expanded from the original 3 tax brackets to the current 5 tax brackets. This also made way for increases to the land transfer taxes rates, raising them with the introduction of these new brackets. Before this change, the highest tax rate was 2%.

    Value of Property Pre-2017 MLTT Tax Rate
    Up to $55,000 0.5%
    $55,000.01 to $400,000 1%
    $400,000.01 + 2%
    Value of Property Post-2017 MLTT Tax Rate
    Up to and including $55,000 0.5%
    $55,000.01 to $250,000 1.0%
    $250,000.01 to $400,000 1.5%
    $400,000.01 to $2,000,000 2.0%
    $2,000,000.01 +  2.5%

    Toronto Land Transfer Tax vs. Other Canadian Cities

    Land transfer taxes were first introduced in most Canadian provinces in the 1970s and 1980s. Toronto is the only major city in Ontario to charge a municipal land transfer tax in addition to the provincial land transfer tax. This means anyone purchasing a home in Toronto faces a double land transfer fee, making Toronto the city with Canada’s highest land transfer tax rates. 

    The name of these transfer taxes varies by province – with Quebec calling it a Welcome Tax and some other provinces/territories calling it a registration fee or tariff. For example, if you’re looking to purchase a home in Edmonton or Calgary, you wouldn’t pay a land transfer tax – instead, you would pay a title registration fee.

    Meanwhile, in other major cities, such as Vancouver – you would pay a much higher marginal land transfer tax based on the provincial rates – but still much less than Toronto as they do not levy additional municipal taxes. Quebec and Nova Scotia are the only provinces where the land transfer tax rate is based on the municipality, with Montreal’s land transfer tax rate being the highest in Quebec. 

    Non-Resident Speculation Tax 

    Effective October 25th, 2022, Ontario increased its Non-Residential Speculation Tax (NRST) to 25% and applies to all purchases or acquisitions of residential property located anywhere in Ontario by foreign nationals (meaning anyone who is not a Canadian citizen or permanent resident), foreign corporations, and taxable trustees. 

    This tax was introduced to slow purchases by foreign nationals and is applied in addition to the Ontario Land Transfer Tax (LTT) and Toronto Municipal Land Transfer Tax (MLTT), the latter applying to home purchases within Toronto.

    Additionally, beginning January 1st, 2023 and for two years ending on December 31st, 2025, the federal government enacted a measure prohibiting non-Canadians from purchasing residential property in Canada for 2 years. This legislation is known as the Prohibition on the Purchase of Residential Property by Non-Canadians Act, passed on June 23rd, 2022. 

    Frequently Asked Questions

    When was Toronto’s Land Transfer Tax started?

    Toronto’s land transfer tax was first granted under the City of Toronto Act 2006 and approved by Toronto City Council. This tax became effective on February 1st, 2008, to help the city fund projects ranging from housing to transit. 

    Will you need to pay Toronto Land Transfer Tax when buying a condo?

    Yes, any property purchased in Toronto city limits is subject to the Toronto Municipal Land Transfer Tax. This tax is a marginal rate based on the home’s total purchase price. 

    When is Toronto Land Transfer Tax to be paid?

    Toronto Land Transfer Tax is paid as part of your closing costs and will be handled by your real estate lawyer. Generally, this tax will be added to your closing costs and is due upon the registration of your property’s title. 

    How can you pay Toronto’s Land Transfer Tax?

    Once the property is registered, you have 30 days to pay the Toronto Land Transfer Tax. Generally, this tax is added to the amount you owe for closing costs and will be handled by your real estate lawyer – there is no need to worry about paying as your lawyer will handle this for you as part of the closing process.

    How do I avoid land transfer tax in Toronto?

    There is currently no way to avoid paying land transfer taxes in Toronto. First-time homebuyers can leverage the rebates available to offset some of these taxes due upon property registration. 

    Final Thoughts

    Understanding the Toronto Municipal Land Transfer Tax (MLTT) is an important step in the home-buying journey – especially if you’re searching for a property in Toronto. The Toronto Land Transfer Tax is in addition to the province’s land transfer tax – meaning there is a substantially higher cost upfront for buyers purchasing in the City of Toronto. Knowing how this tax is calculated will help you better prepare (and save) for the amount you will need when it comes time to close on your property.