First-Time Land Transfer Tax Rebates in Ontario

What the two rebates actually pay

Ontario charges land transfer tax on a purchase. First-time buyers can get some of it back. The provincial refund is up to $4,000. In the City of Toronto there is a second, municipal rebate of up to $4,475. Together that is up to $8,475 off the tax, not a cheque in the mail.

On the provincial side, $4,000 covers the tax on the first $368,000 of value. Above that you still pay land transfer tax. You just pay $4,000 less. The Toronto rebate works the same way against municipal tax. It wipes the city's tax on the first $400,000 of value. A typical Toronto price still leaves municipal tax to pay.

The Ontario Ministry of Finance and the City of Toronto publish the rules. The numbers above are the current caps. They are not a promise that every first-time buyer gets the maximum.

Who qualifies

You have to meet all of these:

• You are at least 18.
• You are a Canadian citizen or a permanent resident. If you are not yet, you have 18 months after registration to become one and still apply.
• You have never owned a home, or an interest in a home, anywhere in the world. Gift, inheritance, and purchase all count. You do not get a second chance.
• You occupy the home as your principal residence within nine months of the transfer.
• If you have a spouse, that spouse did not own a home, or an interest in a home, anywhere in the world while they were your spouse.

This is not the same test as the federal Home Buyers' Plan. Prior ownership anywhere, including outside Canada, kills the Ontario refund.

The spouse rule

Ontario uses spouse as the Family Law Act defines it: married, or living together continuously for at least three years, or parents of a child in a relationship of some permanence. If that person owned a home while you were spouses, neither of you gets a refund. Title split does not save it.

If they owned a home before you became spouses, and not while you were spouses, the qualifying purchaser can still claim, including on the spouse's interest, up to the maximum. Timing is the whole question. Tell the real estate lawyer the dates before anyone is budgeting the rebate into the closing funds.

If you are buying with someone who is not your spouse, the refund follows the first-time person's share only. A 50/50 purchase with a friend who has owned before is a half refund, not a full one.

Parent on title

This is the other way first-time buyers lose the money. A parent on title is either a real owner or a trustee for the bank. Those two facts pay different tax.

Parent as a real co-owner

If the parent is taking a beneficial interest, the refund is cut to the child's share. A 50/50 purchase with a parent who has owned before means the child can claim 50 percent of the refund, so a maximum of $2,000 on the provincial side, not $4,000. The same proportion hits the Toronto rebate. How you take title, joint tenants or tenants in common, does not change that math. The recorded interests do.

Parent as trustee for the bank

If the lender insists a parent go on title only for mortgage purposes, and the parent is not taking a beneficial interest, the Ministry of Finance can still treat the parent as a trustee. The child can still claim the full first-time refund if every other rule is met.

You cannot claim that at electronic registration the usual way. You pay the tax on closing, then apply to the Ministry of Finance for the refund, with evidence: a bank letter that the parent is on title for mortgage purposes, or a trust agreement. Same idea at the city for the Toronto rebate. Do not assume the Teraview statements will paper over a parent on title.

How it is claimed

On a clean file, the lawyer claims it at registration. In Teraview that is a statement in the land transfer tax affidavit. The refund offsets the tax so you bring less money on closing. You do not apply on a government website first.

A Toronto real estate lawyer will ask whether you or your spouse have ever owned. Answer the worldwide question, not the Ontario one. A condo you inherited and sold still counts.

If you missed it

You have 18 months from registration to apply. Ontario takes online applications now. Toronto wants its own package: the rebate form, the registered transfer, the agreement, the statement of adjustments, proof of citizenship or permanent residence, and proof you moved in. Utility bills and property-tax bills are not occupancy proof. The city charges a processing fee on a post-registration rebate. Ontario pays no interest on a late claim.

These rebates are not the new-housing HST rebate, and they are not the foreign-buyer taxes. Citizenship timing for the refund is not the same as the foreign buyers prohibition. Do not mix the programs.

Frequently Asked Questions (FAQ)