In Ontario, every person buying a condo, house or land is subject to land transfer tax ("LTT"), which is due upon closing.
If you live in Toronto then you are also subject to paying Toronto Land Transfer Tax ("TLTT") in addition to the Ontario LTT and any other closing fees such as real estate commissions, legal fees and disbursements, and/or a home inspector. As of January, 1 2017, first time homebuyers have a maximum of $4,000 tax rebate towards their first home or condo greater than $368,000.00.
Where one of the individuals are not a first-time homebuyer the refund is reduced by the proportionate share of ownership. This often arises where parents are required to be on title for the purpose of the mortgage.
In Ontario, to qualify for the refund you must be 18 years or older, and not have previously owned a home in Canada or anywhere else in the worldwide. The person purchasing the home must occupy within a 9-month period after purchase. And lastly, those looking to buy a home must apply for the refund within 18 months of purchasing the property if it was not deducted at the time of closing. Where you are purchasing a newly constructed home the home must come with the Tarion New Home Warranty.
If you are a spouse and owned a home prior to your marriage that became your matrimonial home, then your non-titled partner is subsequently disqualified from the rebate on the next purchase.
It is standard practice for the real estate lawyer handling the file to claim the land transfer tax rebate immediately upon registration of the transfer. If the rebate is not collected at the time when registered, the full tax is paid, and any refund claims can be made to the Ministry of Finance within an 18 month period. Requirements for the application are: a copy of the agreement of purchase and sale, a copy of a document that provides proof of residence such as a driver’s license, a copy of the registered land transfer deed and a completed Ontario Land Transfer Tax refund affidavit for first time purchasers of eligible homes.
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This blog is not to be construed as legal advice and you should consult a lawyer for legal specific matters.