Written by: Stefania Rotundu
If you are considering purchasing property in Ontario, it is important to be aware of potential additional costs, one of which is the land transfer tax. This tax applies when acquiring land or an interest in land and is payable to the province upon closing. Land transfer tax is calculated based on the amount paid for the property. The term “land” includes not only the land itself but also any buildings to be constructed and fixtures.1 Certain transfers are exempt from land transfer tax, including:
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- Certain transfers between spouses;2
- Transfers from an individual to their family business corporation;3
- Inter-family transfers of farmland;4 and
- Certain transfers of land between registered charities.5
However, unless a specific exemption applies, most real estate transactions in Ontario are subject to this tax. In an attempt to increase housing affordability, the Government of Ontario offers a land transfer tax refund for eligible first-time homebuyers. Starting January 1, 2017, the maximum refund was increased to $4,000.00 for transactions occurring after this date.6 Additionally, no land transfer tax is payable on the first $368,000.00 of the purchase price.7
To qualify for this refund, the purchaser must be at least 18 years old, occupy the home as their principal residence within nine months of the transfer, and never have owned an eligible home anywhere in the world at any time.8 Eligible homes include detached homes, semi-detached homes, townhouses, certain shares, mobile homes, and condominium units.9 However, eligibility has been restricted to Canadian citizens and permanent residents.10
Your lawyer can claim your refund at the time of registration by completing the required statements electronically under the “Explanation” Tab of the Land Transfer Tax Statements or by submitting a paper registration and an Ontario Land Transfer Tax Refund Affidavit for First-Time Purchasers of Eligible Homes at the Land Registry Office.
While the 2017 increase in the refund amount has provided some relief for first-time buyers, housing costs in Ontario have risen significantly. As of April 2025, the benchmark price for a home in Ontario was $812,500.00, an increase from $599,400.00 in January 2017—representing a 35.55% increase.11 Given the current high-interest rate environment, raising the refund amount further could enhance homeownership opportunities for first-time buyers. While the refund aims to enhance affordability, it inadvertently creates a dual-class system. Immigrants who have previously owned homes abroad are ineligible for this benefit, despite the potentially stark contrast in housing affordability between their home countries and Ontario’s major cities. This creates a barrier for newcomers looking to establish themselves in Canada.
Contact MUNERA if you are interested in purchasing a property and need assistance navigating these tax constraints!
1 Land Transfer Tax Act, RSO 1990, c L.6, s. 1.
2 O Reg 696.
3 O Reg 697.
4 Ibid.
5 O Reg 386/10.
6 Ibid at s. 9.2.
7 See: Government of Ontario, Land Transfer Tax Refunds for First-Time Homebuyers, online: Government of Ontario <https://www.ontario.ca/document/land-transfer-tax/land-transfer-tax-refunds-first-time-homebuyers>.
8 Supra note 1 at s. 9.2(2).
9 Ibid.
10 Ibid at s. 9.2(1).
11 CREA, MLS HPI Tool, online: CREA <https://www.crea.ca/housing-market-stats/mls-home-price-index/hpi-tool/>.
