Land Transfer Tax: Refund for First Time Homebuyers

Posted on: Monday, August 27th, 2012

When an individual is purchasing their first home, they are eligible for a Land Transfer Tax Credit (LTTC) which is a refund of the cost of land transfer tax in the province in which the property is being purchased. The rebate is available regardless of the purchase price but only to a maximum of $2000.00. This rebate applies to both new and resale homes and there is no interest paid on the refund. For example, a home with a purchase price of $200,000 the tax payable is $1725.00 and would be totally refunded. A home with a purchase price of $300,000, the tax payable would be $975.00. I have a LTT calculator for use on my website under “Practice Areas: Real Estate Law”, located at the bottom of the page. This calculator can be used to determine the LTT for your clients.

Any taxpayers that meet the eligibility requirements may claim an immediate refund at the time of registration. Some lawyers leave the rebate application up to the clients. Normally, lawyers prepare the application as part of the closing procedure and obtain the rebate immediately. If the refund is claimed at time of registration it may offset the land transfer tax that would ordinarily be payable. If the refund is not claimed at registration, then the refund may be claimed directly from the Ministry of Finance and the application must be made within 18 months after the date of closing. No interest is paid on this refund.

It is also important to note that any applications made for a refund payment are subject to audit by the Ministry of Finance and charges/ fines can be laid if a person attempts to obtain a refund by deceit, falsehood or any other fraudulent means. The Ministry would investigate the matter further and determine whether or not there was “willful default”, and if so, there would be a 25% penalty (up to a maximum of $500.00) coupled with interest payments dating back to the date of registration. The homebuyer would also be required to give back the refund that was received under fraudulent means. Further information on this topic can be found in Section 7 of the Land Transfer Tax Act, R.S.O. 1990, c. L.6.

The content of this blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

You can read this full article in the August 2012 Newsletter by clicking here. If you have any questions about this blog, I invite you to contact me at shari@elliottlawyers.com.

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