Also called as property transfer tax, the land transfer tax is applicable in Canada while registering properties. Since this is one of the major costs associated with buying a home, Canadians need to know comprehensive information on this.
Property Tax – Approach with Caution
Provinces including Ontario, Quebec, British Columbia, Manitoba, Nova Scotia, New Brunswick, and Prince Edward Island charge a land transfer tax which is levied on the sale and purchase of real property payable while registering the transfer. In Quebec for instance, land transfer tax is called as “duties on the transfer of immovable”. The provinces not listed above do not however charge any land transfer tax. However, they do charge registration fee that is calculated based on the value of the property being transferred. Most often, these charges are also referred to as land transfer tax. However, the rates of these charges are significantly lesser than the land transfer taxes applicable in the other provinces.
Know the Rules for your Province
In certain provinces, the individual municipalities might impose additional land transfer tax. For instance, in case of Nova Scotia, the rates are decided by the individual municipalities. Toronto has an exclusive kind of land transfer tax.
Home buyers in Canada need to know the land transfer tax rates applicable in various provinces and territories. To illustrate how land transfer tax is calculated in different provinces and territories, consider the registration of a $200,000 property. Depending on the region where the property is located, the following land transfer tax rates are applicable.
|Nova Scotia||Can vary from $0 to $3,000 depending on the municipality|
|Prince Edward Island||$2,000|
|Ontario||$1,725 In addition, the municipal tax of $1,725 is payable for properties located in Toronto|
|Newfoundland and Labrador||$898 In addition, the same amount is payable for registering a mortgage|
Rebates and Exemptions in Property Tax
Home buyers also need to understand the exemptions and rebates applicable. Land or property transfer taxes are applicable in cases of transferring real property. In some cases, there are also exemptions. On satisfying some predetermined criteria, Ontario, British Columbia, and Prince Edward Island give land transfer tax rebates in order to benefit first-time homebuyers. There are also some other kinds of limited rebates available for transfers between family members or closely-related corporations.
Provinces including Saskatchewan and Alberta do not charge any land transfer tax. These are the only two provinces that do not charge land transfer tax. Over and above, the titles registration costs are lower in Alberta than in Saskatchewan. The registration costs in British Columbia and Manitoba are several times more expensive than in these provinces. For more details on land transfer tax rates, the home buyers may contact the corresponding provincial or territorial statutes.
Other Factors Determining Property Tax
If an individual has a joint title with a person who dies at a point, then the registration costs applicable to the survivor is very nominal. If the land owner transfers the land to himself / herself or jointly to other person or the other way round, then the segment that is going back to the same owner is charged at one third of the usual rate, while the portion transferred to the other person is charged at regular rates.
Want to know more about property tax in Canada? Call 1-866-963-CMGC (2642) and talk to the experts.