On November 14th, Ontario Finance Minister Charles Sousa announced that home buyers will now get a $4,000 rebate on their land-transfer tax (LTT) when purchasing their first home. The provision is expected to take effect on January 1, 2017. It would double the existing tax break for first-time home buyers already in place. This larger tax rebate means that first-time home buyers will not pay any LTT on the first $368,300 of the cost of their new home.
However, there are some limits on this new tax rebate. For one, it will only apply to first-time home buyers who are Canadian citizens or permanent residents in Ontario. Secondly, it will only apply to properties with one or two single-family residences, so multi-family residential units don’t qualify.
In order to pay for this new rebate, Minister Sousa also announced that Ontario will increase the LTT on homes that sell for more than $2 million by a half-percentage point, from 2 per cent to 2.5 per cent. This will affect less than 1% of Ontario’s population.
The rest of the LTT will stay the same:
- 2% tax on homes with purchase prices between $400,000-$2,000,000
- 1.5% tax on homes with purchase prices between $250,000-$400,000
- 1% tax on homes with purchase prices between $55,000-$250,000
- 0.5% tax on the first $55,000 of a home’s purchase price
As of October 2016, the average cost for a single-family detached home is $561,000. In Ottawa, the average home price is significantly lower than the provincial average, at $374,000.
Below is a chart demonstrating the land-transfer tax that would be payable for first-time home buyers in Ontario with this rebate. All tax provisions have to pass the Ontario Legislature to become effective.
Price of Home
Land Transfer Tax
Tax Payable After Rebate
|No land-transfer tax payable for first-time home buyers up to this amount||$368,300||$4,000||$0|
|Average price of a home in Ottawa||$374,000||$4,085||$85|
|Average price of a home in Ontario||$518,000||$6,835||$2,835|