To Pay Or Not To Pay, Toronto Home Buyers Take Aim At Land Transfer Tax Rebate
December 19th, 2007 Categories: First-Time Home Buyers, Home Buyers, News Wire, Taxation Nation
As anticipated, the City of Toronto has just announced further details with respect to the Toronto municipal land transfer tax, and the rebates available to eligible Toronto home buyers. Happily, the rebate policies will be reflected in the Teranet collection system sooner than originally thought.
Actually, there has been quite a bit of information to wade through with respect to this tax. 
To accurately capture the details and align deals to take advantage of available rebates has been a bit like taking aim at a moving target, but I know how important this information is for many Toronto home buyers. So, let’s go for the bull’s eye!
Toronto Drops Upfront Tax Payments
I believe the key piece of information in the latest news release is the fact that those who are eligible for full rebates are no longer required to pay the tax upfront, and then claim a rebate (with one exception; see below). Very good news!
Here’s a recap of what transactions are exempt and the available rebates.
Toronto Buyers Hustle To Close
As previously announced, the Toronto land transfer tax is not payable on transactions that close before February 1, 2008 (the date the tax takes effect). This applies to all home buyers, regardless of when the agreement was entered into (which means when the offer was accepted, either firm or conditional). I suspect many deals are being amended in order to take advantage of this exemption. If possible, go for it!
If your transaction closes on or after February 1, 2008, this tax is payable at the time of registration; however, the City of Toronto allows for certain rebates as follows.
Toronto Tax Rebates May Apply To You
You are eligible for a full rebate of the Toronto land transfer tax if:
- Your transaction is grandfathered (you entered into an agreement on or before December 31, 2007), regardless of when you close your deal.
- You are a first-time home buyer (new and resale) and as such are eligible for a rebate of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000).
However, there is one important exception to the upfront tax payment:
If you are a first-time home buyer with land transfer tax payable above the maximum rebate amount (you’ve bought a home for more than $400,000), you will be required to pay the full tax, and then receive the maximum rebate of $3,725 from the City. Once the Teranet collection system has been modified to handle this type of transaction (scheduled for Spring of 2008), you will only have to pay the balance of the tax above $3,725 at the time of registration.
