Toronto Municipal Land Transfer Tax Increase

Written By Jane C. Helmstadter and Doug Chen

The City of Toronto has increased its municipal land transfer tax rates to match the recent changes to provincial land transfer taxes, effective March 1, 2017.

At its meeting on February 15, 2017, the City Council of Toronto approved and adopted Bill 123 to amend City of Toronto Municipal Code Chapter 760 Taxation and Municipal Land Transfer Tax (By-law No. 122-2017). Bill 123 was subsequently enacted on February 16, 2017, and its stated objectives are to harmonize certain aspects of the municipal land transfer tax regime with those of the Ontario land transfer tax regime. There are three main changes to the municipal regime:

1. The tax rates have been increased to match those of the provincial regime (which were increased on November 16, 2016–our firm's overview of this increase can be found here);
2. Eligibility under the first-time buyer rebate program has been restricted to Canadian citizens and permanent residents (or those that become Canadian citizens or permanent residents within 18 months after the conveyance or disposition); and
3. The maximum amount of tax subject to rebate under the first-time home buyer rebate program has been increased from $3,725 to $4,475.

These changes will affect transactions closing on or after March 1, 2017. Unlike the recent provincial land transfer tax increases, there is no grandfathering period for agreements made before the date of the new legislation–the amendments apply to all transactions closing on or after March 1, 2017, regardless of when the agreements were signed.

Set out below is a chart comparing the current land transfer tax rates with the new rates:

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