What Is the Ontario Land Transfer Tax Rebate for First-Time Home Buyers? A Complete Guide

Buying your first home is often as stressful as it is exciting. New financial responsibilities are suddenly falling on your shoulders, from mortgage financing and various closing costs to Ontario first-time home buyer land transfer tax. In this article, we are going to take a closer look at what this tax is and how you can qualify for the first-time home buyer Land Transfer Tax Rebate. Let’s get started!

What Is the Ontario Land Transfer Tax Rebate?

The Ontario Land Transfer Tax Rebate is available to first-time home buyers and is intended to help them offset the cost of the land transfer tax they pay on their home purchase. Similar land transfer tax rebates are available in the provinces of British Columbia and Prince Edward Island, along with a separate rebate in the city of Toronto.

As such, qualifying homeowners in Ontario may be eligible to receive up to $4,000 through the Ontario Land Transfer Tax Rebate. As a first-time homebuyer in Toronto, you may qualify for up to $4,475 in additional rebates.

Do First-Time Home Buyers Pay Land Transfer Tax in Ontario?

Whenever purchasing a property in Ontario, buyers are required to pay a land transfer tax upon closing, regardless of whether this is their first property or not. The amount of the tax paid depends on the value of the property purchased:

• 0.5% of the first $55,000 of the property value
• 1% of the property value from $55,000 to $250,000
• 1.5% of the property value between $250,000 and $400,000
• 2% of the property value between $400,000 and $2,000,000
• 2.5% of the property value above $2,000,000

For instance, if you were to buy a $500,000 home in Ottawa, you would end up paying $6,475 in land transfer tax. The good news is that eligible first-time homebuyers may receive an Ontario land transfer tax rebate to offset a portion or all of the land transfer tax amount. So, for your home purchase in Ottawa, you may be able to qualify for up to $4,000 in rebates.

Eligibility for the Land Transfer Tax Rebate in Ontario

To qualify for the first-time home buyer Land Transfer Tax refund in Ontario, you must meet the following criteria:

• You must be no younger than 18 years old.
• You must move into the home as your main residence within 9 months of the transfer date.
• You must be a first-time homebuyer, meaning you have never owned an eligible home or an interest in an eligible home, at any time and anywhere around the world.
• If you have a spouse, they must be considered a first-time homebuyer as well.
• If the agreement of purchase and sale was signed before December 14, 2007, the home must be newly constructed and eligible for the Tarion New Home Warranty.
• You must apply for the rebate within 18 months of registration of the closing or the date of the unregistered deposition.

Note that on January 1, 2017, the Ontario Land Transfer Tax Rebate was restricted to Canadian permanent residents and citizens only. However, buyers who entered agreements of purchase and sale on or prior to November 14, 2016, are still eligible for the refund regardless of their residency status. Buyers who are not eligible for the rebate on the closing date based on their residency status have 18 months to obtain citizenship or permanent resident status and become eligible.

How Much Can First-Time Home Buyers Claim?

The maximum amount of Land Transfer Tax Rebate available to first-time home buyers in Ontario is $4,000. From the previous example, if you paid $6,475 in Land Transfer Tax for your Ottawa home purchase, you may qualify to receive up to $4,000 in rebates, which will leave you with a total tax amount of $2,475.

How to Apply for the Land Transfer Tax Rebate

There are several ways to claim the Ontario First-Time Home Buyer Rebate:

1. Claim the rebate online. You can claim the rebate online, through the electronic land registration system. You must complete specific statements, found under the “Explanation” tab of the Land Transfer Tax section. 
2. Submit paper registrations. Alternatively, you can apply for an instant rebate. This can be done at the time of submitting paper registrations at the Land Registry Office. When filing the Transfer/Deed and Land Transfer Tax Addifavit, you would also need to file the Ontario Land Transfer Tax Refund Affidavit for First-Time Purchasers of Eligible Homes.
3. Claim the rebate through the Ministry of Finance. If you cannot claim the rebate at the time of registration, you can obtain a refund later, by submitting a series of documents to the Ministry of Finance.

Final Tips for First-Time Home Buyers in Ontario

If you are buying your first home in Ontario, things can get stressful. However, there is no need to panic! The first-time home buyers’ Land Transfer Tax Rebate in Ontario, along with other first-time home buyer programs, is intended to make the transition smoother and ease the financial burden of purchasing a home. If you require additional assistance or advice, do not hesitate to reach out to the Mortgage Advisors, – we are always here to help.

Frequently Asked Questions

Can I get the rebate if I co-own the home with a non-first-time buyer?

No, all home buyers must be considered to be first-time buyers.

What happens if I forget to apply during the purchase process?

You will have 18 months to apply for the Land Transfer Tax Rebate after the purchase, which can be done through the Ministry of Finance.

Is the rebate available for homes purchased outside Ontario?

The provinces of British Columbia and Prince Edward Island offer similar Land Transfer Tax Rebates, albeit the first-time home buyer Land Transfer Tax Rebate amount and qualification criteria might differ.