If you qualify as a first time homebuyer you will save up to $2,000.00 off the Ontario Land Transfer Tax. If you are purchasing a property in Toronto you will also receive up to $3,750.00 off your Toronto Land Transfer Tax.
In order to qualify for the First Time Home Buyers Land Transfer Credit (FTHLTC), a purchaser must:
- Be at least 18 years of age;
- The Application for the refund must be made within 18 months after the date of the purchase or conveyance of the property. Mister Real Estate Lawyer always advises to complete the application at the time of closing so that our clients receive an immediate rebate;
- The purchaser must occupy the home as his or her principal residence within 9 months of the date of closing;
- The purchaser cannot have owned a home or had any ownership interest in a home, anywhere in the world;
- A spouse of the purchaser cannot have owned a home or had any ownership interest in a home, anywhere in the world while he or she was the purchaser’s spouse.
NOTE: The eligibility applies to newly constructed homes/condos and resale homes.
Further details can be found the the Government of Ontario’s website.
What if one of the home buyers is not a first time home buyer?
Typically, if one of the purchasers has previously owned an eligible home anywhere else in the world, that purchaser is not eligible to receive a refund.
If the two purchasers are not married, the refund amount is reduced when one or more of the transferees are not first-time home purchasers. The reduction will be proportionate to the interest in land acquired by the individuals who are not first-time home purchasers.
EXAMPLE 1: A parent who is not a first-time home purchaser and child who is a first-time home purchaser, purchase a home with equal 50/50 interests, the son may claim 50% of the land transfer tax refund. The child’s claim cannot exceed 50% of the maximum allowable refund. i.e.: 50% of $2000.00 = $1,000.00.
However, if a couple is married, your spouse cannot have owned an eligible home, or an interest in an eligible home, anywhere in the world while being your spouse.
EXAMPLE 2: A couple is engaged to be married on the 1st of June of this year, entered into an agreement to purchase a new home. One of the purchasers had previously owned an eligible home in Canada (which was sold to buy the new home). The other purchaser is eligible for the FTHLTC
RESULT 2A: If the couple married before the purchase or conveyance of the home (i.e. the deal closed on or after 1st of June or later), then the eligible purchaser loses their FTHLTC.
RESULT 2B: If the couple married after the purchase or conveyance of the home (i.e. the deal closed on or before 31st of May or sooner) the the eligible purchaser would receive its proportionate share of the FTHLTC.