Real estate in Canada carries a high price tag. A lot of money moves in, out and through properties. When buying and selling properties there are many fees, costs, and taxes to consider. One of which is land transfer tax. The land transfer tax is payable to provincial and some municipal governments. Across Canada, it is the buyer who pays the land transfer tax. Location plays a significant role in how much is paid when it comes to land transfer tax. Provinces and municipalities earn a lot of money through this tax. Be sure you understand it and budget your property purchases accordingly. Continue reading for more information!
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Table of contents
What is land transfer tax?
Land transfer tax is payable to the government when land transfers from one entity to another. Land transfers normally occur when a property is bought and sold. The exact amount of the land transfer tax depends on the purchase price of a property. It is typically a percentage of the total price. The exact percentage paid depends on what province or municipality the land is in. Each province in Canada sets their land transfer tax rate. Some municipalities have added land transfer tax rates. Most often it is the buyer who pays the land transfer tax.
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Land transfer tax is a way for the government to generate revenue. Allowing the province and municipality to earn money with each real estate sale. Homebuyers need to know about the land transfer tax in the area they are buying. This is an additional cost, on top of a purchase price of a property. The land transfer tax can affect your budget and limit your spending power. It increases the overall expense of a property purchase.
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Who pays the land transfer tax, the buyer or the seller?
Land transfer tax is paid by the homebuyer. Sellers are not responsible for this fee in any province in Canada. However, the seller would’ve paid the land transfer tax when they purchased the property initially.
The total fee is determined from the purchase price. Each province has a land transfer tax rate that they set. Further, some municipalities in Canada have additional land transfer taxes on top of the provincial amount. Homebuyers need to factor in these additional costs when shopping for a home. It can affect the budget of a property purchase in Canada.
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Who do you pay land transfer tax to?
Land transfer tax is paid to the provincial government. Some municipalities can also charge land transfer tax. When purchasing a property in such a municipality, the buyer will pay land transfer taxes to both the province and the municipality. The tax is usually collected by the buyer’s lawyer, real estate agent or notary public. This collection occurs when all other closing costs are gathered in the property purchase process. This person then sends the land transfer tax amount to the appropriate government authority.
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How much is the land transfer tax?
The land transfer tax in Canada varies by province. In some cases, municipalities can charge additional land transfer taxes on top of the provincial amount. Ultimately, the exact location where a property is bought affects the amount of tax you pay. Each province has its own set of rules, rates, and exemptions. The tax is generally calculated as a percentage of the property’s purchase price. However, this depends on the province and city the property is bought.
Some provinces have tiered systems, and the tax amount increases as the purchase price increases. Some provinces offer first-time homebuyers tax credits, for a portion of the land transfer tax. In other words, you can get a refund on the land transfer tax you pay during tax season, in some cases. Some provinces do not have a tax at all, instead, they have an one time fee. As already mentioned, some municipalities charge additional land transfer taxes.
When buying a property, always get up-to-date information from your local real estate agent. Real estate brokers and lawyers should also be able to provide current information. They will also be able to provide the information on your local municipality. As of December 2023, these are the various land transfer tax rates by province:
| Province | Property Price | Marginal Tax Rate |
| Ontario | First $55,000 | 0.5% |
| $55,000 – $250,000 | 1.0% | |
| $250,000 – $400,000 | 1.5% | |
| $400,000 – $2,000,000 | 2.0% | |
| $2,000,000+ | 2.5% | |
| British Columbia | First $200,000 | 1.0% |
| $200,000 to $2,000,000 | 2.0% | |
| $2,000,000 to $3,000,000 | 3.0% | |
| $3,000,000+ | 4.0% | |
| Manitoba | First $30,000 | 0.0% |
| $30,000 to $90,000 | 0.5% | |
| $90,000 to $150,000 | 1.0% | |
| $150,000 to $200,000 | 1.5% | |
| Over $200,000 | 2.0% | |
| Quebec | First $53,200 | 0.5% |
| $53,200 to $266,200 | 1.0% | |
| $266,200+ | 1.5% | |
| New Brunswick | Any purchase price | 1% |
| Prince Edward Island | Any purchase price | 1% |
| Newfoundland and Labrador | Any purchase price | No land transfer tax; property registration fee. $100, plus 40 cents for every $100 of purchase price over $500 |
| Nova Scotia | Any purchase price | No land transfer tax; Deed transfer tax. Varies from 0.5%-1.5% by municipality. 5% for non-residents of the province |
| Alberta | Any purchase price | No land transfer tax; property registration fee. Base fee of $50 and an additional $2 for every $5,000 in property value Mortgage registration: $50 plus $1.50 for each $5,000 of your mortgage amount |
| Saskatchewan | Any purchase price | No land transfer tax; 0.3% fee of property value |
| Northwest Territories | Any purchase price | No land transfer tax; Registration Fee: $1.50 for every $1,000 of property value, $1 for every $1,000 past $1,000,000. Mortgage Fee: $1 for every $1,000 of mortgage amount |
| Yukon | Any purchase price | No land transfer tax; 3 fees: Assurance fee, Transfer fee, and Mortgage fee. Assurance fee: only applies if the purchase price is higher than when the property was last transferred. $20 for: First $10,000 of additional value $10 for: Each additional $10,000 onwards of additional value Transfer fee: Is a flat fee based on purchase price. Less than $100,000: $50 $100,000-$500,000: $150 $500,000-$3,000,000: $350 $3,000,000-$10,000,000: $550 $10,000,000+: $750 Mortgage fee: Is a flat fee based on purchase price. Less than $100,000: $50 $100,000-$500,000: $100 $500,000-$1,000,000: $200 $1,000,000-$5,000,000: $400 $5,000,000-$10,000,000: $600 $10,000,000-$20,000,000: $800 $20,000,000+: $1,000 |
| Nunavut | Any purchase price | No land transfer tax; Registration Fee: $1.50 for every $1,000 of property value, $1 for every $1,000 past $1,000,000. Mortgage Fee: $1 for every $1,000 of mortgage amount |
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Is land transfer tax deductible?
Land transfer tax is not tax-deductible as a personal expense on your federal income tax return. However, tax laws and regulations can change or vary depending on the situation. There may be specific situations or exemptions where certain portions of land transfer tax could be deductible.
If a property is purchased for investment purposes or as part of a business, you might be able to deduct certain expenses. This can be complex and would typically fall under business or self employed expense deductions. It would not be a direct deduction for the land transfer tax itself. It would require the support of a tax professional or an accountant.
Always consult with a tax professional or accountant who can provide guidance in these complex scenarios. They will be able to understand your specific circumstances. They will also be up to date on tax laws in effect at the time of your property purchase. Seeking their advice is the best way to get accurate deductions and tax benefits.
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Paying Land Transfer Tax in Canada
Paying land transfer tax in Canada is the responsibility of the buyer when purchasing a property. The tax amount is based on the purchase price of the property. The exact amount is largely determined by the province and municipality a property is purchased within. Normally, it is some percentage of the purchase price. The payment is made to the provincial government by your real estate lawyer, agent or the party facilitating the transaction. When budgeting for your home purchase, be sure to check if your city or municipality charges an additional land transfer tax on top of the provincial one.
The process of paying land transfer tax usually involves your legal representative. A lawyer or a notary public manages the transfer of ownership. They do this by handling the financial aspects of the transaction, including closing costs. They ensure the correct amount is paid to the appropriate government authority.
It’s essential to consider the land transfer tax. All closing costs add up significantly and affect your budget. When buying a property in Canada, it is the buyer who pays land transfer tax. If you need any help during your home buying process, may it be with land transfer tax or otherwise, consider consulting a financial advisor. Complete this quick questionnaire to be matched today!
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