Oct 25, 2007 - Toronto Land Transfer Tax transition rules

October 25, 2007

Toronto Land Transfer Tax transition rules

BILD is hearing from many anxious home buyers regarding implementation of the Toronto
land transfer tax and we understand members are too. So, while it is irritating to have to explain
a tax we vehemently opposed, as a service to members and their buyers or prospects, here goes.

The following is summarized but not materially edited from the City of Toronto web-site.

Tax rate
The City rates do NOT exactly mirror the provincial rates. The tax rate structure is:
-one-half of one percent of the value up to and including $55,000 (same as province);
-one per cent of the value exceeding $55,000 up to and including $400,000 (provincial rate is
1.5% on value between $250,000 and $400,000);
-two per cent of the value exceeding $400,000 (same as province)

Transition rules
-purchasers with an Agreement of Purchase and Sale (APS) entered into on or before
December 31, 2007, will receive a full rebate of the Toronto LTT regardless of the closing date.
(BILD has no clue why the City would not have proceeded by way of an exemption rather than
a rebate, nor any details on where or how to apply. The City says more details on
implementation will be available by October 29. It would certainly appear, however, that
members have a window of opportunity for new project launches and/or to clear inventory).
-purchasers with an APS signed after December 31, 2007 with a closing date before February 1,
2008, will not be required to pay the Toronto LTT. (BILD has no clue why the City chose not
to harmonize the pre-sale exemption date with the effective date of the tax).
-purchasers with an APS signed after December 31, 2007 with a closing on or after February 1,
2008, will be required to pay the full Toronto LTT.

First-time buyer rebate
A City rebate of up to $3,725 (tax on a $400,000 home at City rates) will apply to first-time
purchasers of both new and existing homes. (BILD notes that during the provincial election
campaign, Premier McGuinty promised to extend the provincial LTT rebate to existing homes
as well, but for now it is for newly built homes and condos only. Furthermore, the provincial
rebate is currently capped at $2,000, representing the land transfer tax on an approximately
$237,000 home, GST excluded).

For more details, please visit www.toronto.ca/finance/revenue_tools.htm#council

LTT transition rules PDF