Buying in Toronto and hearing you have to pay land transfer tax twice? You are not alone. Toronto buyers pay a provincial tax and a separate City of Toronto tax, and both are due at closing. In this guide, you will see how the taxes are calculated, what first-time buyer rebates can save you, and how to estimate cash needed on closing with clear examples. Let’s dive in.
What land transfer tax means in Toronto
If you buy a home or condo in Toronto, you pay two land transfer taxes: the Ontario Land Transfer Tax and the City of Toronto Land Transfer Tax. Each tax uses the same marginal rate brackets. Your total LTT is the sum of both calculations.
You, the buyer, pay LTT at closing when the title is registered. Your lawyer handles payment from your closing funds, so you need to plan for it in advance.
Land transfer tax rates
Toronto applies the Ontario and City taxes using the same brackets:
- 0.50% on the first $55,000 of price
- 1.00% on the portion from $55,000.01 to $250,000
- 1.50% on the portion from $250,000.01 to $400,000
- 2.00% on the portion from $400,000.01 to $2,000,000
- 2.50% on the portion above $2,000,000
Because Toronto charges both provincial and municipal LTT, you effectively pay the rates above twice, once for each tax. The calculations are done separately, then added together.
How to calculate your LTT
You use the marginal bracket method. That means you calculate the tax on each price portion that falls in a bracket, then add the bracket amounts.
Here are worked examples for typical Toronto price points:
Example A: $600,000 purchase
- Provincial LTT: $8,475
- City of Toronto LTT: $8,475
- Combined LTT before rebates: $16,950
Example B: $1,200,000 purchase
- Provincial LTT: $20,475
- City of Toronto LTT: $20,475
- Combined LTT before rebates: $40,950
Example C: $350,000 first-time buyer
- Provincial LTT: $3,725
- City of Toronto LTT: $3,725
- Combined LTT before rebates: $7,450
- If you qualify for the full first-time buyer rebates for both taxes, your LTT can be fully offset in this price range.
First-time buyer rebates
First-time purchasers who meet eligibility rules can receive rebates from both the province and the city.
- Ontario rebate maximum: up to $4,000
- City of Toronto rebate maximum: up to $4,475
- Combined maximum: up to $8,475
These rebates can eliminate LTT on many lower-priced homes and reduce it meaningfully on mid-range purchases.
Typical eligibility highlights:
- You, and your spouse or common-law partner, must be true first-time buyers. Neither of you can have owned a qualifying home anywhere in the world.
- You must intend to occupy the home as your principal residence within a set time after closing, commonly within 9 months.
- Additional program rules apply. Corporate purchasers are usually ineligible.
Rebates are usually applied for at closing through your lawyer. Confirm your eligibility early. Rules and wording can change, so verify details with your lawyer and the official provincial and city resources.
Other closing costs to budget
Beyond LTT, plan for standard closing items so you are not surprised on closing day:
- Legal fees and disbursements: about $800 to $2,000 for a typical resale transaction
- Title insurance: about $200 to $500
- Property tax and utility adjustments: varies based on prepaid amounts
- Condominium fee adjustments: if applicable
- Home inspection: about $300 to $600
- Appraisal if required by lender: about $300 to $600
- Mortgage or lender admin fees: varies by product
- Mortgage default insurance for high-ratio mortgages: often added to the mortgage, confirm with your lender
- HST on new construction and some builder items: resale homes are generally HST-exempt
For resale purchases, closing costs can range from a few thousand to tens of thousands, mostly depending on LTT and price. Higher-priced homes see larger LTT.
Estimate your cash needed at closing
A simple way to estimate buyer cash at closing is:
Cash needed = Down payment (cash portion) + LTT net of rebates + legal fees + title insurance + adjustments and prepaid items − mortgage funds advanced at closing.
Example: $600,000 purchase with 20 percent down ($120,000). Combined LTT from Example A is $16,950. Add legal and title of about $1,500 and adjustments of about $500. Estimated cash needed is $138,950. Your lawyer will confirm exactly what you need to bring in certified funds.
Mortgage proceeds can sometimes be used by your lawyer to help pay closing costs, but do not assume you can add LTT to your mortgage. Ask your lender and lawyer early in the process.
Practical steps to stay on track
- Get an LTT estimate early using official provincial and City of Toronto calculators.
- Confirm first-time buyer rebate eligibility with your lawyer. Do not assume automatic qualification.
- Ask your lender and lawyer whether mortgage funds can cover LTT and other closing costs, and whether your mortgage amount can be adjusted if needed.
- Budget conservatively. For mid to higher price points, set aside 2 to 3 percent of the purchase price for closing costs on top of your down payment.
- Buying a new build or assignment? Speak with a lawyer who handles builder agreements and HST.
- Have your lawyer prepare and file any rebate applications at closing.
Common scenarios to consider
- Move-up buyer at $1,200,000: Your combined LTT is about $40,950 before any rebates, which is often the largest single closing cost after your down payment.
- High-end purchase above $2,000,000: The portion above $2,000,000 is taxed at 2.5 percent by both the province and the city, so plan for substantial LTT.
- First-time buyer under about $400,000: If you qualify, combined rebates can fully offset LTT, which keeps your upfront closing cash lower.
Final thoughts
In Toronto, land transfer tax is one of the biggest closing costs you will face, and it is due at closing. Estimate it early, confirm any first-time buyer rebates, and align your mortgage and lawyer instructions so funds are ready on time. If you want a clear plan tailored to your purchase, reach out. Amanda Beecham can help you run the numbers and navigate next steps.
FAQs
How are Toronto and Ontario land transfer taxes different?
- Toronto buyers pay two separate taxes, one provincial and one municipal, calculated using the same rate brackets, then added together at closing.
When do I pay land transfer tax in a Toronto purchase?
- You pay at closing when title is registered, and your lawyer sends the funds from your closing money to the province and the City of Toronto.
Can my mortgage cover land transfer tax in Toronto?
- Your lawyer may use mortgage proceeds to help pay closing costs, but you should not assume LTT can be added to your mortgage without lender approval.
How much can first-time buyers save on land transfer tax?
- Eligible buyers can receive up to $4,000 from Ontario and up to $4,475 from the City of Toronto, for a combined maximum of $8,475.
What closing costs should I expect besides LTT in Toronto?
- Common items include legal fees, title insurance, property tax and condo fee adjustments, inspection, and appraisal, which often total a few thousand dollars or more.
