LTT and MLTT: What Buyers Need to Know


What is land transfer tax (LTT)? LTT is among the costs paid at the end of a real estate transaction. It is facilitated by your real estate lawyer on the day of your home purchase’s closing, must be paid in cash and cannot be rolled into the mortgage.


While LTT (or a version of it) varies from province to province, in Ontario it is calculated based on the “true value of consideration” of your new home’s property. It must be paid to the province and, if you are a buyer in the City of Toronto, to the municipality as well. Toronto home purchasers are the only buyers in Canada who must also pay a municipal land transfer tax (MLTT) in addition to a provincial one.


Who Pays LTT and MLTT?


Essentially, LTT is the tax charged for the action of transferring a property deed from a previous owner to a new one. It applies to every real estate transaction, whether residential or commercial, and is the buyer’s responsibility (home sellers do not pay LTT).


All buyers must pay LTT, with the following exceptions:

  • Buyers purchasing a home priced under $368,000 do not have to pay LTT to the province.
  • Buyers purchasing a home priced under $400,000 do not have to pay MLTT to the City of Toronto
  • The ownership of a property is being transferred between spouses
  • The buyer is a first-time home buyer and has access to rebates that partially or wholly offset the cost of the tax

Because the LTT must be paid in cash, it’s vital that buyers account for it in their home buying budgets, along with their down payment, HST (if purchasing a newly-built home), lawyer fees, and any additional investor or surveying costs.


How Much LTT Will I Pay?


LTT is by far the priciest of closing costs; depending on the location and value of the home, it can add tens of thousands of dollars to a real estate transaction.

For example, let’s assume a buyer is purchasing a $500,000 home within the City of Toronto, which means they’ll pay both LTT and MLTT. According to the taxation rate, they’ll have a total LTT tax bill of $12,950. However, if the buyer was purchasing a home outside of the city, they’d only need to pay $6,475 to the province.

Visit the official City of Toronto Municipal Land Transfer and Ontario Land Transfer Tax websites to learn more about LTT and MLTT tax rates.

LTT can be especially challenging for buyers in high-valued markets. Assuming a buyer purchases a detached home at the average Toronto price of $1,191,052, they’ll need to pay $20,296 each to the province and municipality – that’s an additional $40,592 on top of their purchase price!


LTT First-Time Home Buyer Rebates


Fortunately, if you’re a first-time home buyer, you’ll receive a substantial break on the amount of land transfer tax you’ll need to pay, with a rebate of $4,000 from the province of Ontario (doubled from $2,000 as of November 2016). Toronto buyers will also receive a maximum of $4,475, following the city’s harmonization of the MLTT and LTT rates as of March 1, 2017.

The first-time buyer LTT and MLTT rebates are applied for by your real estate lawyer on your behalf – be sure to communicate your first-time home buyer status and wish to apply when discussing your legal real estate services. If you’re eligible for the entire MLTT rebate, the it will automatically be applied when your property transaction is registered by your lawyer. However, if you only qualify for a portion, the entire amount of MLTT will be collected when the transaction closes, and the buyer is reimbursed afterward with a cheque.

To qualify for first-time home buyer LTT and MLTT rebates, you must meet the following criteria:

  • The property is classified as residential (including new builds and resale homes)
  • The purchaser must be at least 18 years old, and is a Canadian citizen or permanent resident
  • The purchaser must live in the home as their principal residence, and must reside in the property no later than nine months after its purchase
  • The purchaser cannot have owned a home or had home ownership interest in the past, anywhere in the world.
  • If the purchaser has a spouse, that spouse cannot have owned property or had ownership interest in the past, anywhere in the world, while married to the purchaser – if this is the case, neither spouse is eligible for a rebate. If the purchaser’s spouse owned property prior to their marriage but had divested of it before marrying the purchaser, the purchaser will then be eligible for a partial rebate of $2,000 provincially, and up to $2,237.50 from the city.


Save Separately for LTT Costs


There’s nothing worse than realizing your home transaction will be much costlier than anticipated. That’s why it’s important that home buyers factor the financial impact of LTT and MLTT into their budgets from the start. Use tools such as land transfer tax calculators to establish how much tax you’ll need to pay on a home within your desired price range, and communicate openly with your real estate transaction team on how closing costs can vary, and what to expect.



Bio: Zoocasa is a real estate website with Toronto townhouse, Toronto condo and Toronto house listings and provides advanced search features such as property types and school boundaries.

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