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Understanding the Property Transfer Tax 2023

May 29, 2023 Andrew AdolphAudits

Acquiring a property and wondering about the tax? When you purchase or transfer property in
Canada, you may be required to pay a property transfer tax. The property transfer tax, also
known as the land transfer tax, is a tax on the sale or transfer of property, including land and
buildings. In this blog, we’ll take a closer look at the property transfer tax in Canada, including
who is required to pay it and how it is calculated.

Understanding The Property Tax 2023

 

Who is Required to Pay the Property Transfer Tax?

The property transfer tax is typically paid by the buyer of the property. In some provinces, such
as British Columbia and Ontario, the seller may also be required to pay a portion of the tax. The
amount of the property transfer tax is based on the fair market value of the property being
transferred.

How is the Tax Calculated?

The property transfer tax is calculated as a percentage of the fair market value of the property
being transferred. The percentage varies by province, and in some cases, by the value of the
property. For example, in British Columbia, the property transfer tax is calculated as:

● 1% on the first $200,000 of the fair market value of the property
● 2% on the portion of the fair market value between $200,000 and $2 million
● 3% on the portion of the fair market value over $2 million.

So, if you were purchasing a property in British Columbia with a fair market value of $800,000,
you would be required to pay $15,000 in property transfer tax ($2,000 on the first $200,000,
$12,000 on the portion between $200,000 and $800,000).
Other provinces have different rates and thresholds. For example, in Ontario, the property
transfer tax is calculated as:

● 0.5% on the first $55,000 of the purchase price
● 1% on the portion between $55,000 and $250,000
● 1.5% on the portion between $250,000 and $400,000
● 2% on the portion over $400,000

If you were purchasing a property in Ontario with a purchase price of $600,000, you would
be required to pay $8,475 in property transfer tax. This is calculated as $275 on the first
$55,000, $1,950 on the portion between $55,000 and $250,000, $2,250 on the portion between
$250,000 and $400,000, and $4,000 on the portion over $400,000.

Exemptions and Rebates

There are some exemptions and rebates available in certain situations. For example, in British Columbia, first-time homebuyers are eligible for a partial exemption from the property transfer tax. In Ontario, first-time homebuyers may be eligible for a
refund of all or part of the tax. There are also exemptions and rebates available for certain types of property transfers, such as transfers between spouses or common-law partners, transfers between family members, and
transfers to a trustee in bankruptcy.

 The Bottom Line

This tax is an important consideration when purchasing or transferring property in Canada. The amount of the tax varies by province and the fair market value or purchase price of the property. It’s important to factor in the cost of the property transfer tax when budgeting for
a property purchase or transfer. If you have questions about the property transfer tax in your province, feel free to book a free consultation with me below. You can also check out my blog for further tax information or the CRA website.

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Andrew Adolph

Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.