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Land Transfer Tax
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Author:  Darrell & Taralyn [ Fri Jun 02, 2006 1:16 pm ]
Post subject:  Land Transfer Tax
When we purchased our home last year, we were given budget closing costs from Mattamy, including 1200 for Land Transfer Tax.

Our closing is in a couple weeks and I just recieved a call from our lawyer with our final closing costs, including Land Transfer Tax of $3300.

Has anybody had problems such as this from Mattamy. Is there a reason (new by-law etc.) why land transfer taxes could have increased so much since last year.

This is our first home, I had no idea what the costs would be and assumed that the values Mattamy had given us were correct.
Author:  Darrell & Taralyn [ Fri Jun 02, 2006 2:09 pm ]
Post subject: 
This is both of ours first home

I have only been given the numbers verbally over the phone, but she was saying our closing costs will be close to 7000 including 3300 for land transfer taxes

I will have to get the papers so I can see exactly what the costs are
Author:  woodclan [ Fri Jun 02, 2006 2:55 pm ]
Post subject: 
If it is your first home, your do not pay the first $2,000 of the land transfer tax. Maybe your cost is 3,300 - 2,000 = 1,300. Double check with your lawyer.
Author:  hockeymortgagemom [ Fri Jun 02, 2006 4:36 pm ]
Post subject: 
If it is your closing costs including ltt...then it is your miscellaneous Mattamy charges that are the bulk of that.....that special "closing day" costs that they ding you for over and above your purchase price...ie. tree planting, 2nd coat of your driveway, hook-ups, etc. etc.

A small portion of that would be your land transfer tax that was beyond the credit available for first time homebuyers who purchased new from a builder.

Hope this helps!
Jessica :)
Author:  Darrell & Taralyn [ Fri Jun 02, 2006 5:04 pm ]
Post subject: 
They must not realize this is our first home. They also gave us all the miscallaneous pricing such as tree planting, driveway, water hookup etc.

I will call my lawyers office on Monday and ensure this gets straightened out

thanks for the replies everyone
Author:  Adrienne [ Fri Jun 02, 2006 5:21 pm ]
Post subject:  lawyer
the tree planting and other misc. costs you do have to pay for....
Author:  BuildingHomes.ca [ Fri Jun 02, 2006 8:42 pm ]
Post subject: 
Short bit on Closing Costs I wrote a while back:

http://www.buildinghomes.ca/index.html? ... costs.html
Author:  Jen [ Fri Jun 02, 2006 11:03 pm ]
Post subject: 
Land Transfer Tax has recently changed.
All extras are now considered part of your purchase price that is considered for Land Transfer Tax... ie. tree planting, hydro meter, gas meter, law society levy... (which would change he original LTT quoted but most likely not by 2,000.00)
But everyone on here is right. If this is your first house purchase in the world.. then you are entitled to a reduction of $2,000.00 (for both of you) but your lawyer will not know this is your first house unless you tell them.
Author:  Jen [ Mon Jun 05, 2006 8:55 am ]
Post subject: 
Lucya wrote:
me and my boyfriend are also 1st time home buyers and because we are coming from our parents home the land transfer tax was reduced by about $2,000. It was explained to us on the day of purchase that we have to pay for this but a reduction would be given.

it really sucks!


The $2,000.00 reduction is taken off the top. Any excess amount over $2,00.00 is payable on closing and there is no further reduction or rebate given back to you.

so if your LTT is $2,150.00
your rebate - 2,000.00
Total payable on closing would be $150.00
Author:  Jen [ Mon Jun 05, 2006 2:42 pm ]
Post subject: 
Pitapoda wrote:
Hi!

Yes.. I can imagine how those closing costs can accumulate. Land transfer tax (if it is your first home) is reduced by $2000.00; however, the closing costs they are quoting you are pretty normal. What I find hilarious is that all those charges for tree planting, etc, still occur, even if you don't wind up with a tree on your boulevard! We had friends of ours go through the closing cost nightmare, so we had our lawyer cap the costs on the original documnets from Mattamy.


Not to mention that Land Transfer Tax is now calculated on those extras as well.. ( your purchase price plue tree planting, hydro etc. etc all added together then LTT is calculated on that amount)

You can find the bulletin in PDF form regarding the changes at

http://www.trd.fin.gov.on.ca/userfiles/ ... 437_1.html

Ministry of Finance Page 1 of 6
LTT 1-2006 March 2006
Determining the Value of the Consideration
for Transfers of New Homes
Land Transfer Tax Act
• This bulletin provides guidelines to assist in understanding how to calculate the “value of the
consideration” in the purchase of a newly constructed home.
• The information in this bulletin does not replace the law found in the Land Transfer Tax Act and related
regulations.
General
Tax Base The true “value of the consideration” is the amount to be declared in the land transfer tax
statements for electronic land registrations, or in the Land Transfer Tax Affidavit which is
required to be filed with the Land Registrar for attachment to all conveyances tendered for
registration.
Land transfer tax is calculated on the true value of the consideration, which is defined in
subsection 1(1) of the Land Transfer Tax Act (Act). For information on the rates and
calculation of the tax, please refer to Tax Bulletin LTT 2-2005 Calculating Land Transfer
Tax.
The definition of the value of the consideration is broad, and is not limited to the purchase
price stated in an agreement of purchase and sale. Regard must be given to the
definitions of “convey”, “conveyance” and “land” which are broad as well. These
definitions may be found at the end of this bulletin.
Some Factors To Be Taken Into Account in Determining the Value of the Consideration
Extras and
Upgrades
Purchasers of new homes often agree to a base purchase price and then advise the
builder of any extras and upgrades that they want.
The value of these extras and upgrades are to be included in determining the value of the
consideration. Some examples of extras and upgrades that are part of the structure are:
• upgraded flooring, cupboards, doors, windows, counters, etc.,
• architectural changes,
• extra doors and entrances,
• whirlpool baths,
• finished basements,
• roughed in washrooms,
• fireplaces.
LTT 1-2006 March 2006
Ministry of Finance Page 2 of 6
The value of upgrades to the land are also to be included in determining the value of the
consideration. Some examples of these upgrades are:
• lot premiums,
• tree planting,
• sodding and grading,
• driveway paving.
Installations In a new home, builders typically install gas, hydro and water meters and the like. Where
the builder adds the cost of installation, over and above the purchase price stated in the
agreement of purchase and sale, the value of these installations are to be included in
determining the value of the consideration.
Assumed
Liabilities and
Miscellaneous
Costs
The definition of value of the consideration includes the value of any liability assumed and
the value of any benefit conferred “as part of the arrangement relating to the
conveyance.”
In many cases, the builder has assumed liabilities and incurred other miscellaneous costs
which are passed to the new home buyer. As these costs are assumed by the new home
buyer as part of the arrangement relating to the conveyance, they form part of the value
of the consideration. Some examples are:
• lot levies,
• development charges,
• school levies,
• increases in development levies imposed by a municipality,
• the vendor’s Law Society of Upper Canada transaction levy surcharge,
• a late request for upgrades fee,
• the Ontario New Home Warranty Plan fee,
• architect’s fees.
Construction as
Part of an
Arrangement
Relating to a
Conveyance
Land is defined as including a structure to be constructed on land as part of an
arrangement relating to a conveyance. This is in addition to land and any existing
structures and fixtures.
Entering into separate agreements for the purchase of the land and the construction of a
new home on it will not reduce the value of the consideration for the transaction if they
are all integral to the arrangement relating to the conveyance. A good rule of thumb to
determine if this is integral to the arrangement is: “if the purchaser doesn’t enter into the
agreement to construct the new home, will he or she still get the land?” Where the
conveyance of the vacant land is dependent on the construction of the home, then the
arrangement is to buy the land and the structure to be constructed; both agreements
must be taken into account to determine the true value of the consideration.
Assignment of
Agreement of
Purchase and
Sale
Where vendor A and purchaser B have entered into an agreement of purchase and sale,
and then C takes an assignment of B’s interest, the true value of the consideration on the
transfer to C includes:
• the consideration for the assignment,
• the purchase price in the agreement assigned, and
• the value of extras, upgrades, installations, etc. as set out above.
Note: registration of any notice of the agreement between A and B also attracts land
transfer tax.
LTT 1-2006 March 2006
Ministry of Finance Page 3 of 6
Selling the Newly
Constructed
Home to a
Second Purchaser
Where vendor A and purchaser B have entered into an agreement of purchase and sale,
and then B enters into a separate agreement to sell the same property to C, the true
value of the consideration for the transfer to C includes:
• the purchase price in the resale agreement, and
• the value of any costs and liabilities assumed by C.
Note: registration of any notice of the agreement between A and B also attracts land
transfer tax.
Addressing
Arrangement/
Agreement(s) as
a Whole
All aspects of the arrangement/agreement(s) as a whole should be addressed in
determining the value of the consideration. The statement of adjustments often provides
a good basis for a review of items that should be included in the determining the value of
the consideration. The examples cited earier in this section are not exhaustive.
Goods and Services Tax (GST) and the GST Rebate
GST not Included Newly constructed homes are subject to the GST. The GST is not to be included in
determining the value of the consideration.
Assigned GST
Rebate may be
Included
Frequently, the agreement of purchase and sale for a new home requires the purchaser
to assign any GST rebate to the vendor. The assigned rebate often forms part of the
value of the consideration. For details, refer to Tax Bulletin LTT 4-2004 Effect of the
Goods and Services Tax on the Value of the Consideration.
Statement or Affidavit Setting Out the Value of the Consideration
Electronic Land
Registrations
Where a conveyance is tendered for registration as an electronic document, the allocation
of the true value of the consideration subject to land transfer tax is to be set out in
Statements 1 (a) through (f) in the Consideration tab.
Other
Registrations
If the conveyance is tendered for registration otherwise than as an electronic document,
allocation of the true value of the consideration subject to land transfer tax is to be set out
in Lines 2 (a) through (e) of the Land Transfer Tax Affidavit submitted to the Land
Registrar with the conveyance.
Retail Sales Tax
Retail Sales Tax Where chattels such as fridges, stoves, dishwashers, draperies, furniture and equipment
are included in the purchase of the home, the value of these items is subject to retail
sales tax. As a result, the value of these items does not form part of the value of the
consideration that is subject to land transfer tax.
For electronic land registrations, the value of these chattels is to be entered in Statement
1(h) - Value of all Chattels in the Consideration tab.
For other registrations, the value of these chattels is to be listed on Line 2(g) - Value of all
Chattels in the Land Transfer Tax Affidavit.
For more information on retail sales tax, please contact the nearest Ontario Ministry of
Finance Tax Office listed under Taxes - Provincial (Retail) Sales Tax in the blue pages of
your telephone directory, call our TAX FAX Service at 1-877-4-TAX-FAX (1-877-482-
9329), or visit our website at www.trd.fin.gov.on.ca.
LTT 1-2006 March 2006
Ministry of Finance Page 4 of 6
Definitions from the Land Transfer Tax Act
Convey “convey” includes the granting, assigning, releasing, surrendering, leasing or disposing of
land in Ontario, agreeing to sell land in Ontario, or the giving of an option upon or with
respect to any land in Ontario, or the registration of a caution or notice of any kind
signifying the existence of an unregistered instrument or writing by which land is
conveyed, whether the effect of any of the foregoing is to bring into existence an interest
of any kind in land or is only for the purpose of giving effect to or formal recognition to any
interest of whatsoever kind that theretofore existed in land, but “convey” does not include
any transfer of land for the purpose only of securing a debt or loan, or any transfer by a
creditor for the purpose only of returning land that had been used as security for a debt or
loan.
Conveyance “conveyance” includes any instrument or writing by which land is conveyed and includes
a final order of foreclosure under any mortgage or charge affecting land and a caution or
notice of any kind in writing signifying the existence of any instrument or writing by which
land is conveyed.
Land “land” includes lands, tenements and hereditaments and any estate, right or interest
therein, a structure to be constructed on land as part of an arrangement relating to a
conveyance of land, a leasehold interest or estate, the interest of an optionee, the interest
of a purchaser under an agreement to sell land, or goodwill attributable to the location of
land or to the existence thereon of any building or fixture, and fixtures.
Value of the
Consideration
“value of the consideration” includes,
(a) the gross sale price or the amount expressed in money of any consideration given
or to be given for the conveyance by or on behalf of the transferee and the value
expressed in money of any liability assumed or undertaken by or on behalf of the
transferee as part of the arrangement relating to the conveyance and the value
expressed in money of any benefit of whatsoever kind conferred directly or
indirectly by the transferee on any person as part of the arrangement relating to
the conveyance,
(b) in the case of a final order of foreclosure under any mortgage or charge affecting
land, the lesser of,
(i) the value of the consideration determined under clause (a) plus the
amount owed under the mortgage or charge at the time it is foreclosed,
including principal, interest and all other costs and expenses other than
municipal taxes, secured by the mortgage or charge and owing at the time
plus the amount owing similarly calculated under any mortgage or charge
that is
subsequent in priority to the mortgage or charge in respect of which the
final order of foreclosure is made and that is held by the mortgagee or
chargee in whose favour the final order of foreclosure that is registered is
made, or
(ii) an amount established to the satisfaction of the Minister to be equal to the
fair market value of the land that is subject to the mortgage or charge,
LTT 1-2006 March 2006
Ministry of Finance Page 5 of 6
Value of the
Consideration
(cont’d)
(b.1) in the case of a conveyance of land to the mortgagee or chargee under a
mortgage or charge affecting the land when the conveyance is given in
satisfaction of the amount owed under the mortgage or charge, the lesser of,
(i) the value of the consideration determined under clause (a) plus the
amount owed under the mortgage or charge at the time the conveyance is
made, including principal, interest and all other costs or expenses other
than municipal taxes, secured by the mortgage or charge and owing at the
time plus the amount owing similarly calculated under any other mortgage
or charge that is subsequent in priority to the mortgage or charge in
respect of which the conveyance is made, if that mortgage or charge is
held by the mortgagee or chargee to whom the conveyance is made, or
(ii) an amount established to the satisfaction of the Minister to be equal to the
fair market value of the land that is subject to the conveyance,
(c) in the case where a lease of land, a transfer of the interest of a lessee under a
lease of land, or a notice of any kind in writing signifying the existence of an
unregistered lease of land or of an unregistered transfer of the interest of a lessee
under a lease of land is not exempt from tax by virtue of subsection (6), the fair
market value, ascertained as at the time of the tender or submission for
registration, of the land to which the lease extends or of a smaller portion of such
land if only such smaller portion is conveyed,
(d) in the case of a caution or notice of any kind in writing signifying the existence of
any unregistered instrument or writing by which land is conveyed and that is not a
notice in writing described in clause (c), the value of the consideration determined
under clause (a) or (b) for the land conveyed by the unregistered instrument or
writing that is referred to in such caution or notice in writing that is not a notice in
writing described in clause (c),
(e) in the case of a conveyance of land from a trustee (whether or not the trustee is
so described in the conveyance) to a person to whom or for whose benefit any
equitable or beneficial interest in the land has been transferred by a conveyance
or conveyances that have not been registered, the value of the consideration
determined under clauses (a) to (d), whichever is applicable, in respect of the
unregistered conveyances made to such person,
(f) in the case of a conveyance of land from a trustee to another trustee (whether or
not either trustee is so described in the conveyance) where,
(i) the person to whom or for whose benefit any equitable or beneficial
interest in the land is held is not the same person to whom or for whose
benefit any equitable or beneficial interest in the land was held by the
trustee making the conveyance when that trustee first acquired legal
interest in the land, and
(ii) valuable consideration has been given by the transferee of an equitable or
beneficial interest for the transfer of any equitable or beneficial interest in
the land held by the trustee making the conveyance while that trustee was
the holder of the legal interest in the land,
the fair market value, ascertained at the time of the tender or submission for
registration, of the land to which the conveyance extends, or
LTT 1-2006 March 2006
Ce bulletin est disponible en français.
Veuillez appeler le 905-433-6393 pour demander la version française du présent bulletin.
v ISBN: 1-4249-0639-3 © Queen’s Printer for Ontario, 2006
Ministry of Finance Page 6 of 6
(g) in the case of a conveyance of land to a corporation where any part of the
consideration consists of the allotment and issuance of the corporation’s shares or
in the case of a conveyance of land from a corporation to any of its shareholders
the fair market value, ascertained at the time of the tender or submission for
registration, of the land to which the conveyance extends.
Additional Information
If this bulletin does not completely address your particular situation, refer to the Act and related regulations, or
contact the:
Ministry of Finance
Land Transfer Tax Program
33 King Street West
P.O. Box 625
Oshawa ON L1H 8H9
Tel.: 905-433-6361
Fax: 905-433-5770
TTY (Teletypewriter): 1-800-263-7776
This bulletin and various other English and French tax materials published by the Ministry of Finance,
may be obtained online at www.trd.fin.gov.on.ca or by calling our TAX FAX service at 1-877-4-TAX-FAX
(1-877-482-9329).
The Land Transfer Tax Act and Ontario’s other statutes and regulations may be obtained online at
www.e-laws.gov.on.ca.
Author:  woodclan [ Mon Jun 05, 2006 2:58 pm ]
Post subject: 
Let me summarize: blah, blah, blah, more $$$, more $$$, more $$$! :?
Author:  Darrell & Taralyn [ Tue Jun 06, 2006 6:31 am ]
Post subject: 
Thanks everyone, we got it all straightened out

It was a simple miscommunication regarding this being our first home

I was already aware that we would have to pay for the additional items. It was just the additional $2000 that had us confused, but has now been resolved

thanks for the help
Author:  Darrell & Taralyn [ Tue Jun 06, 2006 6:31 am ]
Post subject: 
Thanks everyone, we got it all straightened out

It was a simple miscommunication regarding this being our first home

I was already aware that we would have to pay for the additional items. It was just the additional $2000 that had us confused, but has now been resolved

thanks for the help
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