LAND TRANSFER TAX

Two of the most common questions REALTORS® receive when representing a Buyer is "what is land transfer tax" and "how much is it going to cost me?"

In general, if you buy land or an interest in land in Ontario, you must pay Ontario's land transfer tax, whether or not the transfer is registered at one of Ontario's land registry offices.

Land includes any buildings, buildings to be constructed, and fixtures (such as light fixtures, built-in appliances and cabinetry).

Land transfer tax is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.

In some cases, land transfer tax is based on the fair market value of the land, for example, where:

• a lease can exceed 50 years;
• land is transferred from a corporation to one of its shareholders; or
• land is transferred to a corporation, if shares of the corporation are issued.

In addition to the Ontario land transfer tax, currently the City of Toronto has it's own Municipal land transfer tax added to all sales. For information on their land transfer tax visit their website.

HOW MUCH DO I PAY?

The tax rate has not changed since June 1, 1989.

• 0.5% of the value of consideration for the transfer up to and including $55,000,
• 1% of the value of the consideration which exceeds $55,000 up to and including $250,000,
• 1.5% of the value of the consideration which exceeds $250,000, and
• 2% of the amount by which the value of the consideration exceeds $400,000 for land that contains at least one and not more than two single family residences.

As of December 13, 2007 the Ontario Government introduced a Land Transfer Tax rebate for all first time home buyers; for new or resale homes. Prior to December 13, 2007, this rebate applied to new construction only.

First-time homebuyers may be eligible for a refund of all or part of the tax.

Applications for a refund must be made within 18 months after the date of the transfer.

Click here to calculate your land transfer tax!

WHEN DO I PAY THE LAND TRANSFER TAX?

You must pay Ontario's land transfer tax at the time the transfer is registered.

If the transfer is not registered, you must submit a Return on the Acquisition of a Beneficial Interest in Land to the Ministry of Revenue along with payment of tax within 30 days.

Exemptions from land transfer tax are limited. The main exemptions include:

• certain transfers from an individual to their family business corporation;
• certain transfers of farmed land between family members;
• certain transfers between spouses;
• certain transfers of a life lease from a non-profit organization or a charity.

A deferral of land transfer tax may be available when land is transferred between affiliated corporations, and notice of the transfer is not registered in a land registry office.

For more information about exemptions and deferral of land transfer tax, refer to this list of land transfer tax bulletins.

Information courtesy of the Ontario Ministry of Revenue.

MLS® Home Sales Grow Stronger in the Third Quarter

OTTAWA – October 15th, 2009 – National resale housing activity climbed to the highest level of any third quarter on record.

Actual (not seasonally adjusted) home sales via the Multiple Listing Service® (MLS®) Systems of Canadian real estate boards totalled 135,182 units in the third quarter of 2009, according to statistics released by The Canadian Real Estate Association (CREA). This is the highest level of activity on record for the period from July to September. The number of transactions was up 18 per cent from the third quarter of last year, representing the biggest year-over-year increase since early 2002.

Seasonally adjusted national MLS® home sales numbered 127,941 units in the third quarter, up 12 per cent from the previous quarter. Building on two previous quarterly increases, seasonally adjusted MLS® home sales activity now stands 48 per cent above the low reached in the fourth quarter last year.

“Momentum for sales activity remained strong throughout the third quarter,” said CREA President Dale Ripplinger. “Low interest rates, rebounding consumer confidence and an improving overall sense of economic security continue to draw homebuyers to the housing market.”

Actual (not seasonally adjusted) MLS® home sales activity remained strong throughout the quarter. Resale activity in September 2009 posted the fourth consecutive increase from year-ago levels, all of which exceeded 15 per cent. Sales numbered 42,497 in September, up 17 per cent year-over-year and a new record for the month.

Climbing to $327,736, the national MLS® residential average price rose 11 per cent from the same quarter last year. The national average price continues to be skewed upward by a sustained increase in sales activity, including a sharp rebound in activity at the higher end of the price spectrum, in some of Canada’s priciest markets.

July and August also posted new average price records for their respective months. A number of provinces set new average price records for the month of September, and Ontario posted the highest average price on record.

On a seasonally adjusted basis, the supply of homes coming onto the MLS® market edged up in the third quarter after four consecutive quarterly declines. Seasonally adjusted MLS® residential new listings were up one per cent from the previous quarter to 199,824 units. The increase reflects a quarterly rise in the number of new listings in British Columbia and Ontario, Prince Edward Island, and Newfoundland & Labrador.

Nationally, the number of months of inventory was 4.9 months in September 2009. This is down slightly compared to August, and remains well down from the recessionary peak of 12.8 months in January 2009. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.

Click here to view the complete artice from The Canadian Real Estate Association.