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What is Ontario Land Transfer Tax?
Ontario's Land Transfer Tax (LTT) is a provincial tax charged on every purchase of real property in Ontario. It applies to houses, condos, land, and commercial property. The tax is calculated as a percentage of the purchase price using a tiered rate structure — higher purchase prices are taxed at progressively higher rates.
LTT is paid at closing by the buyer. It is not negotiable and cannot be rolled into the mortgage (though it is included in the total funds required at closing). For investors, it is a hard acquisition cost that must be modelled into every deal.
Important for Toronto buyers: Properties within the City of Toronto boundary are subject to both the provincial Land Transfer Tax and the Toronto Municipal Land Transfer Tax. The two taxes are calculated using the same rate structure, effectively doubling the LTT cost for Toronto properties. This is one of the most significant acquisition cost differentials between Toronto and the rest of Ontario.
Provincial LTT Rate Table
Ontario's provincial LTT is calculated in brackets, similar to how income tax works. Each portion of the purchase price is taxed at the rate applicable to that bracket.
| Purchase Price Bracket | Marginal Rate |
|---|---|
| First $55,000 | 0.5% |
| $55,001 to $250,000 | 1.0% |
| $250,001 to $400,000 | 1.5% |
| $400,001 to $2,000,000 | 2.0% |
| Over $2,000,000 | 2.5% |
Toronto Municipal Land Transfer Tax
The City of Toronto charges an additional Municipal Land Transfer Tax (MLTT) on top of the provincial tax. The MLTT uses the same rate structure as the provincial LTT — so Toronto buyers effectively pay each bracket rate twice.
| Purchase Price Bracket | Toronto MLTT Rate |
|---|---|
| First $55,000 | 0.5% |
| $55,001 to $250,000 | 1.0% |
| $250,001 to $400,000 | 1.5% |
| $400,001 to $2,000,000 | 2.0% |
| Over $2,000,000 | 2.5% |
What counts as Toronto? The Toronto MLTT applies to properties within the boundaries of the City of Toronto (amalgamated in 1998). Municipalities like Mississauga, Brampton, Markham, or Vaughan are not part of the City of Toronto and are not subject to the MLTT — only the provincial LTT applies.
New Toronto luxury rates (April 1, 2026): Toronto City Council introduced additional MLTT brackets for residential properties above $3,000,000 effective April 1, 2026, with rates ranging from 4.4% to 8.6% depending on the purchase price. The table above reflects standard rates applicable to properties under $3M. If you are purchasing a Toronto property valued above $3,000,000, use the City of Toronto's official MLTT calculator at toronto.ca for an accurate figure.
How to Calculate Your LTT
To calculate LTT, apply each marginal rate to the portion of the purchase price that falls within that bracket, then sum the results.
For a $500,000 purchase outside Toronto (provincial LTT only):
- First $55,000 × 0.5% = $275
- $55,001–$250,000 ($195,000) × 1.0% = $1,950
- $250,001–$400,000 ($150,000) × 1.5% = $2,250
- $400,001–$500,000 ($100,000) × 2.0% = $2,000
- Total Provincial LTT = $6,475
Worked Examples
| Purchase Price | Provincial LTT | Toronto MLTT | Total (Toronto) | Total (Outside Toronto) |
|---|---|---|---|---|
| $400,000 | $4,475 | $4,475 | $8,950 | $4,475 |
| $500,000 | $6,475 | $6,475 | $12,950 | $6,475 |
| $650,000 | $9,475 | $9,475 | $18,950 | $9,475 |
| $800,000 | $12,475 | $12,475 | $24,950 | $12,475 |
| $1,000,000 | $16,475 | $16,475 | $32,950 | $16,475 |
| $1,500,000 | $26,475 | $26,475 | $52,950 | $26,475 |
First-Time Buyer Rebates
First-time home buyers may be eligible for a rebate on a portion of the LTT paid. Note that these rebates apply to owner-occupied residential purchases — they generally do not apply to investment property purchases.
| Rebate | Maximum Amount | Eligibility |
|---|---|---|
| Ontario Provincial Rebate | Up to $4,000 | First-time buyers of homes up to $368,000 receive a full rebate; partial rebate on higher-priced homes |
| Toronto MLTT Rebate | Up to $4,475 | First-time buyers of homes up to $400,000 receive a full rebate; partial rebate above that |
Investment properties: First-time buyer rebates do not apply to investment property purchases. If you are buying a rental property you will not occupy as your primary residence, the full LTT is payable with no rebate available.
LTT for Investors
For real estate investors, LTT is a direct acquisition cost — it comes out of pocket at closing and is not recoverable through the mortgage. Several implications:
- It affects your equity at purchase. You pay LTT from your closing funds. A $650,000 Toronto investment property costs $18,950 in LTT alone before you've paid legal fees or any other closing costs.
- It is not tax-deductible as a current expense. Under CRA rules, LTT is added to the adjusted cost base (ACB) of the property. You recover it at sale through a higher ACB — reducing your capital gain — but it does not reduce your rental income in the year of purchase.
- It affects cash-on-cash return. LTT is part of your total capital deployed. A deal that looks strong at a $500,000 purchase price looks slightly worse when you add $6,475 to the denominator of your CoC calculation.
- Every purchase triggers it. Unlike some other jurisdictions, there is no exemption for investment properties, no way to defer it, and no threshold below which it doesn't apply.
Modelling LTT Into Your Deal Analysis
LTT should be included in your total acquisition cost calculation from the first pass of any deal. Many investors discover its impact only at closing — by which point it is too late to re-underwrite the deal.
A complete acquisition cost model for an Ontario investment property includes:
- Purchase price
- Provincial Land Transfer Tax
- Toronto Municipal LTT (if applicable)
- Legal fees
- Home inspection
- Title insurance
- Mortgage application and appraisal fees
- Adjustments (prepaid taxes, deposits, closing utilities)
For BRRRR deals specifically, LTT is part of the "all-in cost" that your refinance proceeds need to approach or exceed. Excluding it overstates how much capital you'll recover.
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Get the Analyzer — CA$45.99 →Summary
- Ontario LTT is a tiered tax calculated on the full purchase price, paid at closing by the buyer
- Toronto properties are subject to both provincial LTT and the Toronto MLTT — effectively doubling the cost
- LTT is added to the ACB of the property for CRA purposes — it reduces your capital gain at sale but is not a current rental expense
- First-time buyer rebates exist but do not apply to investment properties
- Always include LTT in your acquisition cost model before analyzing any Ontario deal
This article is for informational purposes only and does not constitute tax or legal advice. Tax rules change — always verify current LTT rates with the Ontario Ministry of Finance and consult a licensed accountant for your specific situation.