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Bridge Beat

Mar 7, 2017

An Update to the Update: Municipal Land Transfer Tax Follows Suit to Provincial Land Transfer Tax Increases

In the middle of February before family day long weekend and without much attention, the City of Toronto quietly approved Bill 123, which harmonized the municipal land transfer tax rates with the recently increased provincial land transfer tax rates. Formally enacted on February 16, 2017 and effective as of March 1, 2017, the City gave very little notice and few considerations to vendors and purchasers currently bound by agreements of purchase and sale.

In contrast to the provincial land transfer tax rate increase which offered a grandfathering period whereby parties under contract could still sneak in under the old rates provided the contracts were entered into and closed by a certain date, the municipal land transfer tax increase became effective immediately after approval and provided parties under contract with a mere two weeks to figure out how to come up with the additional land transfer tax monies.

Among the changes were amendments to the first-time home buyer land transfer tax rebate rules to mirror those announced by the Province (for example, increasing the rebate and restricting eligibility to Canadian citizens and permanent residents) and, as noted above, amendments to the municipal land transfer tax rates to harmonize them with the increased ‚Äč announced in November of 2016. The changes affect all transactions after March 1, 2017, which is the case even for purchase agreements entered into long before then.

For reference, the chart below is excerpted from the Bylaw and it compares how the rates have changed and what our clients can expect in terms of percentage increases:    

Value of Consideration

Residential

All other properties

Before
March1, 2017

On or after
March1, 2017

Before
March1, 2017

On or after
March1, 2017

$0–$55,000.00

0.50%

0.50%

0.50%

0.50%

$55,000.01–$250,000.00

1.00%

1.00%

1.00%

1.00%

$250,000.01–$400,000.00

1.00%

1.50%

1.00%

1.50%

>$400,000.00



2.00%

2.00%


1.50%



2.00%

>$2 million


2.50%

>$40 million

1.00%

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Related Lawyers

Related Practice Areas

Commercial Real Estate Law

Keywords

home buyer  |  Real Estate  |  tax rates  |  Tax  |  provincial rates  |  land transfer tax

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