By Penelope Graham

What is charged by the Ontario government, owed upon closing and generally considered the most reviled part of any real estate transaction? If you guessed the land transfer tax, you’d be correct; this levy, which is calculated based on the total home purchase price, can put buyers on the hook for an additional tens of thousands of dollars depending on where they’re purchasing their home.

LTT can present buyers with considerable sticker shock, especially those in Ontario’s most expensive housing markets. A recent cost analysis from Zoocasa found that, for a repeat home buyer, LTT can range by as much as $27,521 in the City of Toronto (based on the September 2018 average home price of $864,275), to just $1,374 in Sault Ste. Marie, at the average home price of $164,853.

Those purchasing a home in a more moderately priced housing market can expect to pay roughly $5,000 to $7,000 in LTT, the calculations reveal. Check out the infographic below to see how the average amount of LTT differs by market in Ontario, for both first-time and repeat home buyers.

It may come as a surprise to some buyers that LTT can’t be rolled into their mortgage, or that they can’t use other home loans, such as bridge financing, to cover it. It must be paid in cash upon the closing of the transaction in order for them to have the keys in hand.

For this reason, it’s important to understand how clients’ overall affordability can be impacted by this hefty levy. While rebates for first-time home buyers can alleviate much of the LTT burden (they’ll receive $4,000 back from the province upon closing, with Toronto buyers also receiving $4,475 from the municipality as they’re taxed at both levels), they’ll need to account for this cost while saving for their down payments, which can tack years onto their savings timeline.

While sellers do not pay LTT, having to shell out for it on a new home may dissuade some would-be move-up buyers to stay put, rather than dip into their hard-won equity.

Top 5 cities where you’ll pay the most land transfer tax

1 – City of Toronto: $27,531

2 – Oakville: $17,750

3 – Richmond Hill: $16,571

4 – Vaughan: $16,369

5 – Markham: $14,424

Top 5 cities where you’ll pay the least land transfer tax

1 – Sault Ste. Marie: $1,374

2 – Thunder Bay: $2,090

3 – North Bay: $2,359

4 – Sudbury: $2,635

5 – Windsor – Essex: $2,949

Rankings apply to repeat home buyers.


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