In Ontario, provincial Land Transfer Tax (LTT) is payable by anyone who acquires real property or a beneficial interest in land. The rule is that LTT is payable on the value given for obtaining such an interest (legally described as “consideration”). Consideration is generally the amount paid for the land and the amount of any debt or mortgage assumed as part of the purchase.
As with many rules, there are exceptions to the application of LTT. I outline a few of them here:
First-time homebuyers are eligible for a refund of LTT. The conditions for eligibility are:
- They are 18 years or older;
- They have not owned a home or an interest in a home anywhere in the world; and
- They have not been a spouse of someone who has owned a home or interest in a home anywhere in the world while s/he was the purchaser’s spouse.
For example: If Adam owns property and marries Ann, who has never owned a home, Ann does not meet the eligibility requirements for a LTT refund because she was the spouse of someone who has owned property.
It is important to note that the definition of “spouse” includes a) married couples, b) couples who have cohabited for more than 3 years, and c) couples who have lived together “in a relationship of some permanence” and have a child.
This definition of “spouse” also applies to the LTT exemption for transfers between spouses or former spouses, which are not subject to LTT if a) they are made pursuant to a court Order or a Separation Agreement or b) if the only consideration provided is the assumption of an encumbrance such as a mortgage. For example: If Blake owns property and wants his spouse, Barrie, to be added to title, Barrie will not pay LTT for obtaining an interest in Blake’s property so long as no value is changing hands aside from Barrie’s name being added to the existing mortgage.
Transfers from an estate to a beneficiary are not subject to LTT if the transferor is the personal representative of the deceased (i.e. Estate Trustee, Executor, or Estate Administrator) and the recipient is given the property in satisfaction of all or a part of his/her beneficial interest in the estate. This is true regardless of whether the transfer is pursuant to a will or on an intestacy.
If you are thinking of giving or acquiring an interest in land and would like to know if LTT is something you should budget for, please contact one of GGFI’s real estate lawyers who can help you navigate the eligibility requirements for these and other exceptions.