What is land transfer tax? Canadian First Time Home Buyers

You are charged property transfer tax when you make changes to a property's title, including:

• acquiring a registered interest in the property
  
• gaining an additional registered interest in the property
• becoming the registered holder of a lease, life estate, or right to purchase for the property

The amount of tax you pay is based on the fair market value of the land and improvements (e.g. buildings) on the date of registration unless you purchase a pre-sold strata unit. The tax is charged at a rate of 1% for the first $200,000 and 2% for the portion of the fair market value that is greater than $200,000.

For example, if the fair market value of the property is $150,000, the tax is 1% of $150,000 or $1,500.

If the property's fair market value is $500,000 the tax is 1% of $200,000 ($2,000) plus 2% of the remaining $300,000 ($6,000) for a total tax of $8,000.

Exemption

Qualifying first-time buyers may be exempt from paying the PTT of 1% on the first $200,000 and 2% of the remainder of the purchase price of a home priced up to $475,000. There is a proportional exemption for homes between $475,000 and $500,000. At $500,000 and above the rebate is nil.

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