Understanding Ontario Land Transfer Tax: What Every Buyer Should Know

Introduction

Purchasing real estate in Ontario involves more than just agreeing on a purchase price. One of the most significant and often underestimated costs buyers face is Ontario Land Transfer Tax. This mandatory provincial tax is payable whenever ownership of land or property changes hands and applies to nearly all real estate transactions across the province.

Because Ontario Land Transfer Tax is calculated on a progressive scale and paid at closing, it can add thousands or even tens of thousands of dollars to the total cost of buying a home. Buyers in higher-priced markets such as Toronto are often surprised by how much this tax impacts their final budget.

This guide explains Ontario Land Transfer Tax in clear, practical terms, including current rates, how the tax is calculated, when it is paid, and what buyers should prepare for before closing. Understanding this cost early helps buyers plan more accurately and avoid last-minute financial pressure.

Who This Guide Is For

This guide is designed for home buyers who want a clear understanding of how Ontario Land Transfer Tax affects the overall cost of purchasing property. It is particularly useful for buyers purchasing higher-value homes, buyers considering properties in Toronto, and anyone looking to budget accurately for closing costs before committing to a purchase.

Understanding Ontario Land Transfer Tax

Ontario Land Transfer Tax (LTT) is a provincial tax charged whenever ownership of land or property is transferred to a new owner. The tax is payable by the buyer and must be paid at the time the property is registered with the Ontario Land Registry Office.

Ontario Land Transfer Tax can have a meaningful impact on total closing costs. Because it is calculated using a tiered rate system, higher-priced properties are subject to higher overall tax amounts. Many buyers underestimate this expense until late in the transaction, which can create unexpected financial strain.

Understanding how Ontario Land Transfer Tax works also provides important context when reviewing other purchase-related expenses and available rebates. For a broader overview of the buying process, buyers can refer to our detailed home buying guide for Ontario.

Ontario Land Transfer Tax Rates Explained 

Ontario uses a progressive, tiered rate system to calculate Land Transfer Tax. Each portion of the purchase price is taxed at a different rate rather than applying a single percentage to the entire amount. As of 2025, Ontario Land Transfer Tax rates are:

• Up to $55,000: 0.5 percent
  
  
• $55,001 to $250,000: 1.0 percent
  
  
• $250,001 to $400,000: 1.5 percent
  
  
• $400,001 to $2,000,000: 2.0 percent
  
  
• Above $2,000,000: 2.5 percent
  
  

This structure ensures that buyers are taxed proportionally based on property value and helps maintain transparency in the calculation process.

How Much Is Land Transfer Tax in Ontario?

The amount of Ontario Land Transfer Tax payable depends on the final purchase price of the property. For example, purchasing a home valued at $500,000 would result in the following calculation:

• 0.5% on the first $55,000 = $275
  
  
• 1.0% on $55,001 to $250,000 = $1,950
  
  
• 1.5% on $250,001 to $400,000 = $2,250
  
  
• 2.0% on $400,001 to $500,000 = $2,000
  
  

Total Ontario Land Transfer Tax: $6,475

Several factors can influence the final amount, including the property’s location within Ontario, buyer status (such as eligibility for first-time buyer rebates), and the structure of the transaction. Buyers purchasing property in Toronto should also factor in municipal land transfer tax, which is important to consider when reviewing the Toronto real estate market trends.

Ontario’s land transfer tax structure has evolved over time, with earlier systems differing prior to 2017. The current tiered model is designed to improve consistency and fairness across transactions.

Calculating Land Transfer Tax in Ontario

Ontario Land Transfer Tax is charged on the “consideration,” meaning the agreed purchase price of the property. The tax becomes payable when the buyer completes the land registration process through the Ontario Land Registry Office.

Because tax rates increase gradually as purchase price thresholds are crossed, only the portion of the price above each threshold is taxed at the higher rate. This progressive structure prevents sudden tax jumps and ensures buyers are taxed proportionally based on value.

Using an Ontario Land Transfer Tax Calculator

To help with early planning, online Ontario Land Transfer Tax calculators from services such as WOWA and Nesto can provide quick estimates based on purchase price. These tools may also factor in first-time buyer rebates, offering a preliminary view of potential savings.

While calculators are helpful for budgeting, the final Land Transfer Tax amount will be calculated and confirmed by your real estate lawyer at closing. Buyers looking for a broader understanding of total purchase costs can also review our complete home buying guide in Ontario.

Examples of Ontario Land Transfer Tax Calculations

The following examples illustrate how Ontario Land Transfer Tax applies at different purchase prices:

$400,000 home

• 0.5% on $55,000 = $275
  
  
• 1.0% on $195,000 = $1,950
  
  
• 1.5% on $150,000 = $2,250
  
  
• Total: $4,475
  
  

$600,000 home

• Land Transfer Tax on the first $400,000 = $4,475
  
  
• 2.0% on the remaining $200,000 = $4,000
  
  
• Total: $8,475
  
  

First-time buyer purchasing a $500,000 home in Toronto

• Provincial Land Transfer Tax = $6,475
  
  
• Toronto Municipal Land Transfer Tax = $6,475
  
  
• Less maximum available rebate (approximately $8,475)
  
  
• Net Land Transfer Tax: Approximately $4,475
  
  

These examples demonstrate how marginal rates apply to each portion of the purchase price, creating a clear and predictable calculation

When Do You Pay Land Transfer Tax in Ontario?

Ontario Land Transfer Tax is paid at closing, which is the final stage of a real estate transaction when ownership officially transfers from seller to buyer. Payment is handled by the buyer’s real estate lawyer during registration with the Ontario Land Registry Office.

The tax appears as a line item on the closing statement, reinforcing its role as a mandatory and unavoidable closing cost.

Frequently Asked Questions About Ontario Land Transfer Tax

How much is land transfer tax in Ontario?

Ontario Land Transfer Tax is calculated using a progressive rate system based on the purchase price of the property. Rates range from 0.5 percent to 2.5 percent, with higher portions of the purchase price taxed at higher rates.

When do you pay land transfer tax in Ontario?

Land Transfer Tax in Ontario is paid at closing when the property ownership is registered with the Ontario Land Registry Office. The payment is handled by the buyer’s real estate lawyer.

Do Toronto buyers pay more land transfer tax?

Yes. Buyers purchasing property in Toronto pay both the provincial Ontario Land Transfer Tax and a separate Toronto Municipal Land Transfer Tax, resulting in higher total land transfer tax costs.

Is land transfer tax refundable in Ontario?

Ontario Land Transfer Tax is generally non-refundable once paid. Some buyers may qualify for rebates, such as first-time home buyer rebates, which can reduce the amount payable at closing.

Can land transfer tax be included in a mortgage?

Land Transfer Tax is typically paid upfront at closing and cannot be added to the mortgage amount. Buyers should ensure sufficient funds are available to cover this cost along with other

Conclusion

Ontario Land Transfer Tax is a required cost that every property buyer must account for when purchasing real estate in the province. Because it is calculated using a tiered rate structure and paid at closing, the total amount can represent a significant portion of overall transaction costs, particularly for higher-priced homes.

Understanding how Ontario Land Transfer Tax is calculated, when it is due, and how it applies to different purchase scenarios allows buyers to budget more accurately and avoid surprises at closing. Taking the time to plan for this expense is an essential part of a successful real estate purchase in Ontario.

Sources

Government of Ontario – Land Transfer Tax
https://www.ontario.ca/page/land-transfer-tax

Canada Mortgage and Housing Corporation – Land Transfer Tax in Ontario
https://www.cmhc-schl.gc.ca/en/buying/home-buying-process/land-transfer-tax

Financial Consumer Agency of Canada – Real Estate Transaction Costs
https://www.canada.ca/en/financial-consumer-agency/services/mortgages.html#costs