First-Time Home Buyer Incentives in Ontario 2024
Ontario First-Time Home Buyer Calculator
What You Should Know
- First-time home buyers in Ontario can receive a land transfer tax refund of up to $4,000
- You’ll receive the maximum Ontario land transfer tax refund amount if you’re a first-time home buyer that is purchasing a home in Ontario with a price of $368,000 or less
- First-time home buyers in Toronto can also receive a municipal land transfer tax rebate of up to $4,475
- If you're a first-time home buyer in Toronto and your home's purchase price is less than $400,000, you will receive the full Toronto land transfer tax rebate
- First-time home buyers purchasing a home in Toronto will receive both a municipal tax rebate and a provincial tax rebate
Ontario First-Time Home Buyer Incentive
The Government of Ontario provides incentives to its citizens who are first-time home buyers. You can receive a land transfer tax refund in Ontario of up to $4,000. What this means is if the purchase price of your home is less than $368,000, you would pay no land transfer tax. If the purchase price is greater than $368,000, then you would receive the maximum refund of $4,000. This incentive applies for both new construction and resale homes.
How to Calculate The Ontario Land Transfer Tax Refund Amount
Ontario land transfer tax is calculated based on marginal tax rates based on the purchase price of your home. The Ontario Land Transfer Tax refund applies to the provincial land transfer tax portion. The refund is a flat amount that applies to the tax payable up to a maximum refund limit of $4,000. In other words, you can receive up to $4,000 off the land transfer tax if you are a first-time home buyer in Ontario.
If the land transfer tax payable is less than $4,000, which will happen if your home’s purchase price is $368,000 or less, then you will not have to pay any Ontario land transfer tax. If your land transfer tax payable is more than $4,000, then the amount that you will have to pay will be discounted by $4,000.
Ontario Land Transfer Tax vs Toronto Land Transfer Tax
Did you know that homes purchased in Toronto will be subject to both a provincial land transfer tax and a municipal land transfer tax? Homes purchased anywhere else in the province will only be subject to the provincial land transfer tax. However, the City of Toronto provides support to first-time home buyers by also providing a land transfer tax rebate for new home buyers. While you are subject to both land transfer taxes as a home buyer, you may also be eligible for refunds and rebates for both taxes as well.
Suppose you have purchased a home in Sudbury, Ontario for $300,000. Since homes in Sudbury are outside of Toronto, you will only need to pay the provincial land transfer tax. To calculate the Ontario land transfer tax payable, first use the Ontario marginal tax rates to find the tax for each price bracket. Then subtract the tax refund for first-time buyers, up to a maximum of $4,000. The remaining amount is the total land transfer tax payable.
| Purchase Price of Home | Land Transfer Marginal Tax Fee | Land Transfer Tax Calculation |
|---|---|---|
| First $55,000 | 0.5% | $55,000 x 0.5% = $275 |
| $55,000 to $250,000 | 1.0% | ($250,000 - $55,000) x 1% = $1,950 |
| $250,000 to $400,000 | 1.5% | ($300,000 - $250,000) x 1.5% = $750 |
| $400,000 to $2,000,000 | 2.0% | $0 |
| Over $2,000,000 | 2.5% | $0 |
| Ontario Land Transfer Tax | $2,975 | |
| Ontario Land Transfer Tax Refund | -$2,975 | |
| Total Ontario Land Transfer Tax | $0 | |
In this case, the original land transfer tax amount was $2,975. Since this is less than the maximum tax refund of $4,000, the tax refund cancels out the original tax amount. This means that first-time home buyers will have $0 land transfer tax for a $300,000 home in Sudbury.
Let’s say that you’re purchasing a $800,000 home in Mississauga. There’s no municipal land transfer tax in Mississauga, so you’ll only have to pay provincial land transfer tax. The same steps are used as above to calculate the total land transfer tax payable for a first-time home buyer after incentives.
| Purchase Price of Home | Land Transfer Marginal Tax Fee | Land Transfer Tax Calculation |
|---|---|---|
| First $55,000 | 0.5% | $55,000 x 0.5% = $275 |
| $55,000 to $250,000 | 1.0% | ($250,000 - $55,000) x 1% = $1,950 |
| $250,000 to $400,000 | 1.5% | ($400,000 - $250,000) x 1.5% = $2,250 |
| $400,000 to $2,000,000 | 2.0% | ($800,000 - $400,000) x 2% = $8,000 |
| Over $2,000,000 | 2.5% | $0 |
| Ontario Land Transfer Tax | $12,475 | |
| Ontario Land Transfer Tax Refund | -$4,000 | |
| Total Ontario Land Transfer Tax | $8,475 | |
In this example, the land transfer tax amount of $12,475 is over the maximum refund limit of $4,000. The whole refund amount will apply, but there is still tax leftover. You will need to pay this remaining amount of $8,475.
Frequently Asked Questions
Who qualifies as a first-time home buyer in Ontario?
To qualify as a first-time home buyer, you must not have owned a home previously anywhere in the world, or have any interest or stake in a home. Your spouse must not have owned or have an interest in a home while they were your spouse. To be eligible for Ontario's land transfer tax refund, you must also be at least 18 years old.
How do I qualify for Ontario’s Land Transfer Tax Refund?
In addition to being a first-time home buyer and being 18 years old, you must also be a Canadian citizen or a permanent resident. If you are currently not a Canadian citizen or a permanent resident, you have 18 months after your home registration to become one to qualify for the refund. The home you are purchasing must be your principal residence within nine months.
While you can claim the refund when registering your property to offset the land transfer tax payable, you have up to 18 months after registration to claim the refund.
If one or more purchasers of the home is not a first-time home buyer, you may still be eligible for a refund of your land transfer tax. For example, if two individuals purchase a home but only one of them is a first-time home buyer, then only 50% of the transfer tax refund can be claimed.
Toronto First-Time Home Buyer Incentive
The City of Toronto also provides a Municipal Land Transfer Tax Rebate for first-time home buyers purchasing a home in Toronto. A rebate of up to $4,475 is given to first-time home buyers purchasing newly constructed or resale residential properties.
The home buyer will need to be a Canadian citizen or a permanent resident to qualify for the rebate. The buyer will also qualify if they become a Canadian citizen or a permanent resident within 18 months. While you can claim the rebate at the time of registration, you have up to 18 months to claim the rebate.
How to Calculate The Toronto Land Transfer Tax Refund Amount
Both Toronto land transfer tax and Ontario land transfer tax applies to homes purchased within the City of Toronto. Land transfer tax rebates are incentives offered to first-time home buyers, but the municipal tax rebate is calculated separately from the provincial tax rebate.
If you're a first-time home buyer in Toronto, you can receive a rebate of up to $4,475 off your municipal land transfer tax and a rebate of up to $4,000 off your provincial land transfer tax. Currently, Toronto land transfer tax rates are the same as Ontario land transfer tax rates. This means that a home buyer in Toronto will be paying double the land transfer tax compared to a home buyer for the same home purchase price in another municipality. First-time buyers are eligible to receive a rebate for both portions.
Let’s say that you’re purchasing a $300,000 home in Toronto. The tax rates for both the municipal portion and the provincial portion are the same. First, let’s calculate the municipal portion using Toronto land transfer tax rates.
| Purchase Price of Home | Land Transfer Marginal Tax Fee | Land Transfer Tax Calculation |
|---|---|---|
| First $55,000 | 0.5% | $55,000 x 0.5% = $275 |
| $55,000 to $250,000 | 1.0% | ($250,000 - $55,000) x 1% = $1,950 |
| $250,000 to $400,000 | 1.5% | ($300,000 - $250,000) x 1.5% = $750 |
| $400,000 to $2,000,000 | 2.0% | $0 |
| Over $2,000,000 | 2.5% | $0 |
| Ontario Land Transfer Tax | $2,975 | |
| Ontario Land Transfer Tax Refund | -$2,975 | |
| Total Ontario Land Transfer Tax | $0 | |
The municipal land transfer tax for a first-time Toronto home buyer would be $0. Since the provincial portion is the same calculation, the total land transfer tax would be $0.
The maximum tax refund for the provincial portion is $4,000, but the municipal portion has a maximum tax refund of $4,475. This means that first-time buyers of homes with a purchase price of between $368,000 and $400,000 will not have any Toronto land transfer tax due, but will have to pay Ontario land transfer tax.
| Purchase Price of Home | Land Transfer Marginal Tax Fee | Municipal Land Transfer Tax Calculation | Provincial Land Transfer Tax Calculation |
|---|---|---|---|
| First $55,000 | 0.5% | $55,000 x 0.5% = $275 | $55,000 x 0.5% = $275 |
| $55,000 to $250,000 | 1.0% | ($250,000 - $55,000) x 1% = $1,950 | ($250,000 - $55,000) x 1% = $1,950 |
| $250,000 to $400,000 | 1.5% | ($380,000 - $250,000) x 1.5% = $1,950 | ($380,000 - $250,000) x 1.5% = $1,950 |
| $400,000 to $2,000,000 | 2.0% | $0 | $0 |
| Over $2,000,000 | 2.5% | $0 | $0 |
| Ontario Land Transfer Tax | $4,175 | $4,175 | |
| Ontario Land Transfer Tax Refund | -$4,175 | -$4,000 | |
| Total Land Transfer Tax | $0 | $175 | |
| Combined Land Transfer Tax | $175 | ||
The municipal land transfer tax rebate for Toronto cancels out the municipal portion, but the $4,000 tax refund for the provincial portion does not cover the full amount. There is $175 in Ontario land transfer tax that this first time home buyer will need to pay.
Comparing First-Time Home Buyer Incentives
Let’s look at a first-time home buyer in Mississauga that is purchasing a $800,000 home, and a first-time home buyer in Toronto that is also purchasing a $800,000 home. With the first-time home buyer incentives for Ontario, the Mississauga home buyer will receive a $4,000 rebate and pay total land transfer tax of $8,475. The Toronto home buyer will receive $8,475 in land transfer tax rebates but still have to pay $16,475.
Comparing First-Time Home Buyer Rebates in Ontario - $800,000 Home| Total Land Transfer Tax Rebates | Total Land Transfer Tax | |
|---|---|---|
| Toronto | $8,475 | $16,475 |
| Rest of Province | $4,000 | $8,475 |
The presence of a municipal land transfer tax in Toronto means that first-time home buyers in Toronto will be paying more land transfer tax than buyers outside of Toronto if the home’s purchase price is more than $368,000. With average home prices in Toronto’s housing market being well above $1 million, the municipal land transfer tax rebate offers some relief, but for a limited number of homes. Additional incentives for first-time home buyers are available, such as the First Home Savings Account (FHSA) and Home Buyer’s Plan. For more information, visit our page about first-time home buyer incentives in Canada.
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