Land Transfer Tax, argh! The Toronto Real Estate market has finally decided to cool down taking a bit of pressure off of Buyers during the house hunt (The Spring Realty Home Finder is a pretty good tool in case you haven’t heard). Of course there are exceptions to every rule and some homes are flying off the handle at record prices. To be honest, we’ve been getting a bit tired of the demands put on Buyers by unscrupulous Sellers and their agents, but that’s a topic for another post (coming soon). Today I’d like to clear up a massive misconception regarding Land Transfer Tax and the available first time buyer rebates.
As home prices in Toronto reach record levels the average price of a house in Toronto has exceeded $600,000 meaning it has also exceeded the maximum rebate amount provided by both Provincial and Municipal Governments. The maximum rebate amount a First Time Buyer could ever receive is $5750, that’s it.
There is a way to avoid paying Land Transfer Tax as a First Time Buyer and that is to buy a property in Toronto under $227,500. Good luck finding that in Toronto! Even if the place costs $227,600, a mere $100 more, you will owe a whopping $1 in Land Transfer Tax as a first time buyer.
The average price of a condo in Toronto is at $364,597 and the average price of a house in Toronto at $682,864 (Detached $803,671, Semi $562,057) A First time buyer will be charged $1,944 for the condo and $13,790 for the house (add $5371 for the condo and $5725 for the house if you’re not a 1st time buyer). This is cash you cannot include in your mortgage amount. You need to come up with this in cold hard cash, on closing. The only fee that can be added to your total mortgage amount is the CMHC mortgage insurance for buyers with less than 20% down.
Hopefully this clears things up a bit and you can continue your home search comfortably (using the Spring Realty Home Finder of course!). There are other fees but this is the one that catches most people, especially 1st time buyers by surprise. If your agent, friend, or relative tells you that you shouldn’t worry about the Land Transfer Tax as a first time buyer, have them call us, we’ll straighten them out!