Understanding the Ontario Land Transfer Tax

Kanata CA personal injury, family, and real estate law firm

I want to transfer my house to my son. Do we have to pay Land Transfer Tax on such a transfer?

As long as there is no consideration passing between you and your son, and the transfer is a gift to your son, there is no Land Transfer Tax payable.

What is Land Transfer Tax?

Land Transfer Tax is a tax levied by the Ontario government on every transfer of property, subject to some exemptions. The Land Transfer Tax is paid by a person acquiring the property at the time of a transfer. The amount of the Land Transfer Tax is based on consideration passing between a person disposing of property and a person acquiring it. Therefore virtually all purchases of real estate are subject to Land Transfer Tax.

Exemptions to Land Transfer Tax

The Land Transfer Tax is not payable when real estate property being transferred is a gift and there is no consideration passing between the parties. Assumption of an existing mortgage by
person acquiring the property or giving a personal loan by person disposing of property to the person acquiring it is a form of consideration and therefore such a transfer would be subject to the Land Transfer Tax.

Transfer of property between married spouses pursuant to a separation agreement is also exempt from the Land Transfer Tax, regardless of the type and amount of consideration passing between the parties. There are some other exemptions under the Land Transfer Tax Act such as transfers involving trusts, transfers to a charity or transfers to a government organization.

First Time Home Buyer’s Rebate

First time home buyers may qualify for a Land Transfer Tax rebate of $2,000 if they have never owned a real estate property anywhere in the world. Further, a spouse of a first time home buyer cannot own any real estate at the time of purchase and must have disposed of previously owned property prior to becoming a spouse of a first time home buyer.

EDITOR’S NOTE: This publication is the 43rd installment of our firm’s Legal Matters series, which answers a reader’s question every week. If you have a general legal question that you would like to have addressed please send it via email to legalmatters@compellingcounsel.com