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The land transfer tax, or the property purchase tax, is often a forgotten entity. When a buyer purchases a house or land or acquires an interest in a part of the land, he is expected to pay the land transfer tax to the province based on the value of the land or any mortgages associated.

Land Transfer Tax in Canada

Purchasing property in province Ontario and its capital city Toronto, amongst other Canadian provinces, subject the buyer to an additional version of Municipal Land Transfer Tax (MLTT) Tax once the transaction is complete. The MLTT was approved by the Toronto City Council in 2007 and varies according to the property values.
Land Transfer Tax for Municipal and Province is at a marginal rate and can vary from around half a percent to three percent of the total property cost. Buyers purchasing a property in such provinces where MLTT is applicable will have to pay either taxes; the overall cost of payable taxes can even double up as a result. Therefore, the following table given is an example to get an idea of the rates of taxes that goes with each purchase price of a home.

The payable taxes calculated can rise to cash of more than $10,000 on a purchase of a property valuing $700,000. Add up the MLTT to this tax, and it can double to $20,000 even. Buyers in Ontario, Quebec, British Columbia, Manitoba, Nova Scotia, New Brunswick, and Prince Edward should check up on versions of taxes payable before buying one.
However, quite fortunately, first-time buyers in Ontario can become eligible for refunds of all, or a portion of the tax paid.

Who is Eligible for LTT Refund?

First-home buyers are those purchasers who have had no property ownership anywhere in the world. This refund policy is introduced to encourage young and aspiring individuals to invest in Canada and reap the fruits as soon as they get qualified for a refund. To put it into a few simple points;

• Applicant should be of 18 years or above
• Applicant must not have ownership or interest in a home anywhere in the world
• Applicant's spouse must not have any ownership or interest in a home anywhere in the world after he/she became the applicant's partner
• Application filing for a refund should apply no more than 18 months after the date of the transaction closes.
• Applicants must have the property in question as to their residence and not as a rental/vacation home.

The implications of the rules and regulations for property purchases in Canada can plunge an inexperienced buyer into paying heavy costs and taxes. Therefore, first-time buyers and seasonal real estate investors should seek consultation or advisory to prepare for the overhead prices.