The Ontario government is making changes to the Land Transfer Tax that come into effect on January 1, 2017.
Land Transfer Tax (LTT) is payable on the purchase of any land in Ontario and is based on the value of the transaction in question. As of Jan. 1, 2017, LTT rates will increase as follows:
- ·on the portion of the purchase price above $2 million of one or two single-family residences, such as detached and semi-detached homes, townhomes and condominiums, to 2.5 % from 2%.
- ·on the portion of the purchase price above $400,000 of all other types of property, such as commercial, industrial, multi-residential, and agricultural properties, to 2% from 1.5%.
The proposed increases will be used to fund an increase in the LTT rebate for qualified first-time buyers from a maximum of $2,000 to a maximum of $4,000, depending on the value of the purchase.
The Province is also proposing to restrict eligibility for the land transfer tax refund for first-time homebuyers to Canadian citizens and permanent residents as of January 1, 2017. First-time homebuyers who become Canadian citizens or permanent residents within 18 months of purchasing a home can apply for the refund within this 18-month period.
The Ontario government is allowing a transitional period for the new LTT rates. Purchasers who entered into agreements of purchase and sale on or before November 14, 2016, are not subject to the increased LTT rates.
If you have any questions on how these changes may affect you, please contact Heather Picken, head of our Real Estate Group, at email@example.com or (905) 452-6891.