Land Transfer Tax
Purchasers in most large Canadian centres can add Land Transfer Taxes to their list of closing costs.
Unless you live in Alberta, Saskatchewan, or rural Nova Scotia, land transfer taxes (or property purchase tax) are a basic fact of life. These taxes, levied on properties that are changing hands, are the responsibility of the purchaser. Depending on where you live, taxes can range from 0.05% - 2% of the total value of the property.
Many provinces have multi-tiered taxation systems that can prove complicated.
Land Transfer Tax formula in the Province of Ontario:
Up to $55,000 X .5 %
From $55,000 to $250,000 X 1 %
From $250,000 to $400,000 X 1.5 %
From $400,000 up X 2 %
As an example, if you purchase a property for $260,000, 0.5% is charged on the first $55,000 = $275.00, 1% is charged on the difference between $55,000 and $250,000 = $1950.00, while the final $10,000 difference falls in the $250,000 - $400,000 range and is taxed at 1.5% = $150.00. Your total tax bill? $2375.00.