The hardest conversation I have with first-time buyers is rarely about the purchase price. It is about the money they did not know they needed: the costs that land at closing, weeks after the offer, when the excitement has worn off and the cheque has to clear. The largest of these is land transfer tax, and I have been explaining it to buyers on this website since 2007, back when Toronto had just introduced its own tax on top of the province’s. The numbers have changed. The surprise has not. Let me walk you through all of it, so nothing about closing day catches you off guard. These costs belong in your plan from the first showing, alongside everything else to check before you make the offer.
What is land transfer tax, and who pays it?
Land transfer tax is a one-time tax you pay when ownership of a property is registered in your name. The buyer pays it, it is due at closing, and it is almost always paid through your lawyer as part of the closing funds. There is no financing it separately and no monthly version; it is cash you need on the day.
In Ontario, there can be two land transfer taxes on the same purchase:
- The provincial Ontario Land Transfer Tax, which applies everywhere in the province.
- The municipal Toronto Land Transfer Tax (MLTT), which the City of Toronto charges in addition, but only on properties inside the City of Toronto boundary.
This is the “double tax” that makes buying in the 416 noticeably more expensive at closing than buying the same-priced home in the 905. It is the single biggest closing-cost difference between Toronto and the surrounding York Region towns.
Ontario land transfer tax: the brackets
The provincial tax is tiered, so each portion of the price is taxed at its own rate. These rates have been stable since 2017.
| Portion of purchase price | Ontario LTT rate |
|---|---|
| First $55,000 | 0.5% |
| $55,000 to $250,000 | 1.0% |
| $250,000 to $400,000 | 1.5% |
| $400,000 to $2,000,000 | 2.0% |
| Over $2,000,000 (one or two single-family residences) | 2.5% |
Source: Government of Ontario, Land Transfer Tax. For a typical home priced between $400,000 and $2 million, there is a shortcut: price × 2% − $3,525. On an $800,000 home that is $16,000 − $3,525 = $12,475.
Toronto’s municipal tax: the same idea, charged twice
If your home is in the City of Toronto, you pay the MLTT on top of the provincial tax. The base brackets mirror the province up to $2 million, then Toronto adds its own higher tiers on luxury-priced homes. These upper rates went up on April 1, 2026, so make sure any calculator or article you rely on is using the current schedule, not the older 2024 one.
| Portion of purchase price | Toronto MLTT rate |
|---|---|
| First $55,000 | 0.5% |
| $55,000 to $250,000 | 1.0% |
| $250,000 to $400,000 | 1.5% |
| $400,000 to $2,000,000 | 2.0% |
| $2,000,000 to $3,000,000 | 2.5% |
| $3,000,000 to $4,000,000 | 4.40% |
| $4,000,000 to $5,000,000 | 5.45% |
| $5,000,000 to $10,000,000 | 6.50% |
| $10,000,000 to $20,000,000 | 7.55% |
| Over $20,000,000 | 8.60% |
Source: City of Toronto, MLTT Rates and Fees. For most homes under $2 million, the Toronto MLTT equals the Ontario LTT, so you simply pay it twice.
What that adds up to: the same home, Toronto vs the 905
Here is what land transfer tax looks like at a few price points, before any first-time-buyer refund. The “905” column is the provincial tax alone (what you pay in Richmond Hill, Markham, Vaughan, Aurora and most of the GTA outside Toronto). The Toronto column is the provincial tax plus the municipal tax. These are my own worked figures from the brackets above, rounded to the dollar.
| Purchase price | In the 905 (Ontario LTT only) | In Toronto (Ontario + MLTT) |
|---|---|---|
| $500,000 | $6,475 | $12,950 |
| $800,000 | $12,475 | $24,950 |
| $1,000,000 | $16,475 | $32,950 |
| $1,200,000 | $20,475 | $40,950 |
Look at the $1 million row: a Toronto buyer pays about $16,475 more in land transfer tax than a buyer of the same-priced home in Richmond Hill or Markham. That is not a rounding difference. It is a deposit on a car, and it is one of the honest, unglamorous reasons many of my buyers end up looking seriously at York Region. I am not telling you to avoid Toronto; I am telling you to put this number in the comparison before you fall in love with an address.
The first-time-buyer refunds: up to $8,475 back
If this is your first home, the news gets better, and these refunds are the reason I always ask early whether a buyer qualifies.
- Ontario refund: up to $4,000. A qualifying first-time buyer pays no provincial land transfer tax on the first $368,000 of the price, and the maximum refund is $4,000. (Ontario first-time homebuyer refund.)
- Toronto rebate: up to $4,475. A first-time buyer of a home in the City of Toronto can also claim back up to $4,475 of the municipal tax. (Toronto MLTT rebate.)
The two stack, so a first-time buyer in Toronto can reduce their land transfer tax by up to $8,475. To qualify for either, in broad strokes, you must be 18 or older, a Canadian citizen or permanent resident, never have owned a home anywhere in the world, and (for the Toronto rebate) move in as your principal residence within nine months. If you have a spouse, they cannot have owned a home while you were together. Your lawyer normally claims the refund at closing so it comes straight off the tax, but confirm it is being handled; there is an 18-month window to apply.
Worked through: a first-time buyer of a $500,000 home in Toronto owes $12,950 in land transfer tax, less $4,000 (Ontario) and $4,475 (Toronto), for a net of about $4,475. The same buyer in Richmond Hill owes $6,475 less the $4,000 Ontario refund, for a net of about $2,475.
The federal programs that help first-time buyers
When I first wrote about buyer incentives back in 2009, the programs of the day (the one-year Home Renovation Tax Credit, the ecoENERGY grants) have long since expired. Do not budget around them. Here is the 2026 toolkit that actually exists, and most of it is about saving for the down payment and closing costs, not the tax itself:
- First Home Savings Account (FHSA). The flagship program for first-time buyers since 2023. You can contribute up to $8,000 a year to a $40,000 lifetime limit; contributions are tax-deductible like an RRSP, and withdrawals to buy a first home are tax-free like a TFSA. (Canada Revenue Agency, FHSA.)
- RRSP Home Buyers’ Plan (HBP). You can withdraw up to $60,000 from your RRSP (per person, so up to $120,000 for a couple) toward a first home, repaid over 15 years. (CRA, Home Buyers’ Plan.)
- Home Buyers’ Amount. A non-refundable tax credit on a $10,000 claim, worth up to about $1,500 back at tax time. (CRA, line 31270.)
- First-Time Home Buyers’ GST rebate (new builds). Enacted in 2026, this eliminates the GST for first-time buyers on a newly built home valued up to $1 million, with a reduced rebate between $1 million and $1.5 million, worth up to roughly $50,000 on a qualifying new home. It does not apply to resale homes. (CRA, first-time home buyers’ GST/HST rebate.)
These are federal and separate from the provincial and Toronto land transfer tax refunds above; a first-time buyer can use the relevant ones together.
The other closing costs to budget for
Land transfer tax is the biggest closing cost, but it is not the only one. Here is what else I tell buyers to set aside money for, with realistic ranges; treat these as estimates, not quotes.
- Legal fees and disbursements: roughly $1,500 to $2,500 for a straightforward residential purchase, covering your lawyer’s fee plus title search, registration and software charges.
- Title insurance: a one-time premium, often a few hundred dollars for a typical home, that protects you against title fraud, survey problems and certain defects. I consider it money well spent; I wrote separately about why title insurance is the strongest protection against real estate fraud.
- Home inspection: about $400 to $600 before closing (technically a pre-purchase cost, but budget it with the rest). In a market that lets you keep an inspection condition, use it.
- Property tax and utility adjustments: if the seller has prepaid property taxes or utilities past your closing date, you reimburse them their share. This shows up as a credit to the seller on your statement of adjustments. That is a one-time adjustment; the ongoing annual property tax is its own cost, and it varies enough between GTA municipalities to be worth comparing before you buy.
- PST on mortgage default insurance: if you put down less than 20% and need a high-ratio (CMHC-type) insured mortgage, the insurance premium is added to your mortgage, but the 8% Ontario PST on that premium is payable in cash at closing.
- Status certificate (condos): a small fee (around $100) to obtain the certificate your lawyer reviews; on a condo this review is essential, as I explain in the anatomy of a safe condo.
A common rule of thumb is to set aside 1.5% to 4% of the purchase price for closing costs, with land transfer tax the dominant piece. The wide range is mostly the Toronto-versus-905 land transfer tax difference and whether you qualify as a first-time buyer.
The teacher’s summary
Closing costs are the part of buying that rewards planning and punishes surprise. Carry these with you:
- Land transfer tax is the big one, it is due in cash at closing, and in Toronto you pay it twice (provincial plus municipal), roughly $16,000 more on a $1 million home than in the 905.
- First-time buyers can claim up to $8,475 back in Toronto ($4,000 Ontario plus $4,475 municipal), or $4,000 in the rest of the province; make sure your lawyer claims it.
- Save through the FHSA and HBP, and budget another 1.5% to 4% of the price for legal fees, title insurance, adjustments and the rest.
If you want this turned into a real number for a specific home, send me the price and the municipality. I will work out your land transfer tax, factor in the first-time-buyer refunds if they apply to you, and give you an honest estimate of the full cash-to-close so there are no surprises on closing day. No cost, no obligation, and no pressure to go further than a conversation.