Photo: James Bombales

Thinking of upgrading your home? While the rapid appreciation of Ontario real estate may tempt homeowners to cash in and move up, there’s one factor that effectively persuades many to stay put in their current abode: land transfer tax.

Considered the most reviled of closing costs, LTT is charged by the provincial government upon the closing of a real estate transaction. It must be paid in cash, meaning buyers can’t roll it into their mortgage, or utilize home loans such as bridge financing to fund it. The tax is charged by the province of Ontario and is calculated based on the sale price of the home, meaning, in recent years, the amount of LTT paid has grown increasingly steep alongside real estate prices.

Prepare for LTT Sticker Shock

As well, due to the diversity of Ontario’s housing markets, buyers in moderately-priced cities experience less sticker shock than those in the most expensive markets – in some cases, by tens of thousands of dollars. For this reason, it’s important that buyers be aware of the financial impact LTT can have on their home buying budgets, as it can have a significant impact on the home equity available to leverage during a sale, and potentially add years to a down-payment savings timeline.

For example, Toronto buyers are taxed the most LTT due to its high cost of housing – an average of $864,275 in September, according to the Toronto Real Estate Board. As well, it is the only city in Canada to be charged LTT at both the municipal level in addition to the provincial tax, bringing the average total for move-up buyers to $27,531 – that’s the equivalent of paying an additional 3.2% of the total home purchase price!

Rebates Available for First-Time Buyers

While Toronto first-time home buyers benefit greatly from LTT rebates ($4,000 from the province and $4,475 from the city), they’ll still be taxed in the double digits when closing their transaction, at an average of $19,046.

In comparison, a repeat buyer purchasing a home in Sault Ste. Marie at the average price of $164,853 would pay only $1,374 in LTT, just 0.8% of the purchase price. And, because the first-time buyer tax threshold in Ontario is $368,360, a first-time buyer would effectively pay no LTT at all.

However, those are the extremes; buyers in mid-range markets can expect to shell out between $5,000 – $7,000 in LTT. Buyers of Kitchener homes for sale, where the average home price is $479,904, would pay $6,073 in LTT, while a buyer of Ottawa homes for sale would pay $5,467 based on the average home price of $449,613. A buyer of London, Ontario real estate would pay $4,353 for the average $391,846 home.

Check out the infographic below to see how the amount of LTT differs in markets across Ontario, both for repeat and first-time home buyers. is a real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse homes across Canada on the website or the free iOS app.

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