October 29, 2018
Best and Worst Cities in Ontario for Land Transfer Tax [INFOGRAPHIC]
The day of your home purchase closing has arrived – with the mortgage funds and keys in hand, it’s time to embark on the journey of homeownership. But the workout for your wallet is far from over; there are several closing costs that must be paid out before your home transaction is complete, the largest being land transfer tax.
This tax, which is charged by the province (as well as at the municipal level in the City of Toronto), is determined based on the total purchase price of the home and, unlike your mortgage, must be paid in cash.
Tax Amount Ranges By Average Home Price
As the average home price ranges widely across Ontario’s major housing markets, so too does the amount of LTT home purchasers must pay. For example, a buyer in the City of Toronto, where the average home price $864,275 was in September, will be walloped with $27,521 in LTT – that’s an additional 3.2% of the total home purchase price! In comparison, a buyer in Sault Ste. Marie, where homes can be purchased for an average of $164,853, will pay only $1,374 in tax upon closing, accounting for just 0.8% of the total purchase price.
However, buyers in mid-priced Ontario markets can generally expect to pay between $5,000 – $7,000 on LTT. The tax on Kitchener homes for sale, for instance, would come to $6,073 on a home priced at $479,904, while those paying an average of $391,846 in the London real estate market would be taxed $4,353 upon closing. Those in Hamilton, one of the fastest heating markets in the Greater Golden Horseshoe, would pay $6,482 on the average home price of $500,365, while buyers getting into the Ottawa real estate market would pay $5,467 on LTT, based on the average local home price of $449,613.
The amount of tax jumps sharply in Mississauga, however, as the average home price clocks in higher at $734,901, hiking the amount of LTT paid to $11,173.
Repeat Home Buyers Hardest Hit
The good news for first-time home buyers is there are hefty rebates available to take the sting out of LTT: $4,000 from the province of Ontario, and $4,475 from the City of Toronto for local buyers. As well, first timers purchasing a home valued at less than $368,360 effectively pay no LTT at all, a possible scenario in six markets throughout the province: Saut Se. Marie, Thunder Bay, North Bay, Sudbury, Windsor-Essex, and Kingston.
Because LTT can add tens of thousands of dollars to buyers’ real estate bill, it’s important to take this closing cost into account when budgeting for your home purchase. This can be especially challenging for buyers in the hottest markets, as they must either save for longer to have that cash on hand; a distinct disadvantage in a market with rapid price growth, compared to those with more moderate average home prices.
Check out the infographic below to see how land transfer tax varies across Ontario’s major real estate markets for both first-time and repeat home buyers.
Methodology: Average home prices were sourced from each region’s local real estate board. Ontario land transfer tax rates and first-time home buyer rebate information was sourced from the Ontario Ministry of Finance. City of Toronto municipal land transfer tax rates and first-time home buyer rebate information was sourced from the City of Toronto.
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