First-Time Home Buyer Land Transfer Tax Rebate in Ontario

Buying your first home comes with a number of upfront costs, and Land Transfer Tax can be one of the most significant. In Ontario, eligible first-time home buyers may qualify for a Land Transfer Tax refund of up to $4,000, helping reduce the amount payable on closing.

Understanding whether you qualify, how much you may be entitled to, and how the refund is applied can make it easier to plan your closing costs. Here is a practical overview of Ontario’s first-time home buyer Land Transfer Tax refund and what to expect during your purchase.

What Is the Land Transfer Tax Rebate?

When you purchase property in Ontario, you're generally required to pay Land Transfer Tax, calculated based on the value of the consideration, which in a typical purchase is the purchase price.

For eligible first-time home buyers, Ontario offers a Land Transfer Tax refund, often referred to as a rebate, that can reduce or fully eliminate the provincial tax payable on qualifying purchases.

Who May Qualify

To qualify for Ontario's first-time buyer rebate, you must be at least 18 years old and move into the home as your primary residence within nine months of closing, and have no prior homeownership history anywhere in the world. 

Additionally, if you have a spouse, they must not have owned a home, or an interest in a home, while they were your spouse. However, a spouse's homeownership before you became partners does not, by itself, disqualify you. 

Be aware that if you are purchasing with another person who does not qualify as a first-time home buyer, the refund may be reduced based on the ownership interest acquired by the qualifying purchaser or purchasers.

Eligibility is generally limited to Canadian citizens and permanent residents; however, someone who otherwise qualifies may still be able to claim the refund if they become a Canadian citizen or permanent resident within 18 months after the transfer.

It is also important to note that prior ownership does not have to result from a purchase. If you previously acquired an ownership interest in a home through an inheritance, gift, or other means, this may affect your eligibility.

How Much Can First-Time Buyers Save?

Understanding how the savings apply to your purchase price helps you plan your closing costs accurately: 

• Maximum Provincial Savings: You can receive up to $4,000 off Ontario’s Land Transfer Tax.

• Full Tax Exemption: For homes priced up to approximately $368,000, the refund can completely eliminate your provincial Land Transfer Tax.

• Higher-Priced Homes: On purchases over $368,000, you can receive the maximum $4,000 refund and pay the remaining balance.

• Toronto Buyer Bonus: If you are purchasing within Toronto, you may also qualify for a Municipal Land Transfer Tax rebate of up to $4,475, bringing your potential combined savings to up to $8,475.

How Is the Rebate Handled During Closing?

In most cases, you won't have to pay the tax out of pocket and wait for a government cheque. Where you qualify and the refund is claimed at the time of registration, your real estate lawyer can account for it as part of the electronic closing process, reducing the Land Transfer Tax payable on closing.

If the refund isn't claimed at closing, the Land Transfer Tax must generally be paid and an application for the refund can then be submitted to the Ontario Ministry of Finance. The application must be received within 18 months after registration.

Speak with Huza Law About Your Closing Costs

At Huza Law, we help first-time home buyers throughout Ontario understand their eligibility, plan for their closing costs, and move through the purchase process with confidence.

If you're preparing to buy your first home, contact our team today to discuss your eligibility and what to expect at closing.