Question 1

What closing costs do I need to budget for in Canada?

Accepted Answer

Canadian closing costs typically include: land transfer tax (Ontario: roughly 1.5–2% of purchase price), legal fees ($1,500–$2,500), title insurance (~$300), home inspection ($400–$700), property tax adjustment (prorated from purchase date), CMHC mortgage insurance premium tax (Ontario 8% PST on premium), home insurance (first year), and moving costs. Budget 3–4% of the purchase price.

Question 2

How much is land transfer tax in Ontario?

Accepted Answer

Ontario land transfer tax uses a progressive bracket system. On a $700,000 home the provincial LTT is approximately $10,950. First-time home buyers receive a rebate of up to $4,000, reducing it to $6,950. Toronto buyers also pay municipal land transfer tax (another ~$10,950) with a first-time buyer rebate of up to $4,475.

Question 3

Do first-time home buyers pay land transfer tax in Ontario?

Accepted Answer

Yes, but first-time buyers receive a rebate. The Ontario provincial LTT rebate for first-time buyers is up to $4,000. If you buy in Toronto, you also get a municipal LTT rebate of up to $4,475. These rebates automatically reduce the net land transfer tax you owe, and your lawyer handles the application at closing.

Question 4

What is the First-Time Home Buyer Tax Credit in Canada?

Accepted Answer

The First-Time Home Buyers' Tax Credit (HBTC) is a federal non-refundable tax credit. You can claim $10,000 on line 31270 of your T1 tax return for the year you purchase. At the 15% federal tax rate, this results in approximately $1,500 in federal tax savings. Claim it on your income tax return for the year of purchase.

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