Ontario land transfer tax: the rates and how the bill is calculated

Almost every buyer of Ontario real estate pays provincial land transfer tax on closing. It is calculated in marginal brackets: 0.5 per cent on the first $55,000, 1 per cent on the portion from $55,000 to $250,000, 1.5 per cent from $250,000 to $400,000, and 2 per cent above $400,000. On single or two-family residential property, the portion above $2 million is taxed at 2.5 per cent.

Because the brackets are marginal, only the part of the price inside each band is taxed at that band's rate. A $700,000 purchase is not taxed entirely at 2 per cent.

Your lawyer calculates and remits the tax as part of closing, so plan for it as cash you need on closing day rather than something you can finance into the mortgage.