When purchasing a home in Markham, the down payment is not the only sum of money you must provide during the closing process. You will also be required to pay several types of fees and expenses including the land transfer tax.
What is the Land Transfer Tax?
The land transfer tax is a tax that must be paid when a property is being transferred to a new owner. This tax is calculated as a percentage of the home’s property value.
Buyers will be required to pay the tax whether they buy land or an interest in land. According to the Ontario Ministry of Finance, “land includes but is not limited to, any buildings, buildings to be constructed, and fixtures (such as light fixtures, built‑in appliances, and cabinetry). In addition, for certain transfers of land within the Greater Golden Horseshoe Region, a 15% Non‑Resident Speculation Tax (NRST) may apply.”
Be aware that if purchasing land in Toronto, additional land taxes may also be required.
How Much Tax Can I Expect to Pay?
Every province in Canada — except Alberta and Saskatchewan — requires a land transfer tax. Here in Ontario, you pay a percentage of the home’s property value. The tax rates are as follows:
0.5%: For amounts up to and including $55,000.
1%: For amounts exceeding $55,000, up to and including $250,000
1.5%: For amounts exceeding $250,000, up to and including $400,000
2%: For amounts exceeding $400,000.
2.5%: For amounts exceeding $2 million.
You can use an online calculator to estimate the amount of money you can expect to pay.
Who Will Pay the Land Transfer Tax?
All buyers will be required to pay the tax. However, for first-time buyers, some refund options may be available to make homeownership more feasible. Depending on certain eligibility requirements, first-time buyers can receive a refund that is equal to the full value of the land transfer tax and up to a $4,000 maximum.
Be aware that the land transfer tax must be paid during the closing process. You will work with your real estate attorney to finalize this payment.
There are many components to purchasing your dream home in Markham and that is why you need a qualified and experienced real estate agent on your side. Markham real estate agent Martin MacFarlane is ready to assist you throughout the entire process and help you every step of the way. Call him today to begin the hunt for your dream home.