🍁 Toronto land transfer tax: the double tax, explained

Toronto is the only Ontario city that taxes you twice

Buy anywhere else in Ontario and you pay one land transfer tax — the province's. Buy inside the City of Toronto and you pay a second, separate tax to the city: the Toronto municipal land transfer tax (MLTT). At every price most buyers will ever shop at, the Toronto tax uses exactly the same brackets as the Ontario tax, so the practical effect is brutally simple: your land transfer tax doubles. (Toronto's brackets only diverge at the very top, adding higher rates on the portion of the price above $3 million — 2.5% rising in steps to 7.5% above $20 million — where the provincial tax stays at a flat 2%.)

Ontario calculates the tax in brackets, like income tax: 0.5% on the first $55,000 of the price, 1% on the portion from $55,000 to $250,000, 1.5% from $250,000 to $400,000, and 2% on everything above $400,000. Because only the top slice is taxed at 2%, the effective rate is always lower than 2% — on a $650,000 purchase the Ontario tax is $9,475, an effective rate of about 1.46%. The tax is paid by the buyer (never the seller), in cash, on the day the purchase closes, and it sits completely outside your mortgage: you cannot finance it into the loan, which is why it belongs in your closing budget from day one.

Worked example: an $850,000 Toronto purchase

At a $850,000 purchase price, the Ontario tax works out to $13,475: $275 on the first $55,000, $1,950 on the next $195,000, $2,250 on the next $150,000, and $9,000 at 2% on the $450,000 above $400,000. Toronto then charges the identical calculation again — another $13,475. The combined bill is $26,950, due in cash at closing, before you have paid a dollar of anything else. A qualifying first-time buyer claws back the maximum from both levels of government — $4,000 from Ontario and $4,475 from Toronto, $8,475 in total — for a net tax of $18,475. That is still more land transfer tax than a non-first-time buyer pays on the same home anywhere else in the province.

The Toronto first-time buyer rebate

Toronto runs its own rebate alongside the provincial one, on similar terms: 18 or older, never owned a home anywhere, moving in as your principal residence. The city refunds up to $4,475 of the MLTT — exactly the Toronto tax on a $400,000 purchase, so at or below that price the city tax disappears entirely for a qualifying buyer. Stack the two rebates and a Toronto first-time buyer pays zero land transfer tax on homes up to about $368,000; above that, the Ontario rebate is exhausted first and the net tax climbs. One subtlety: the two rebates are claimed separately in your closing paperwork, and if you buy with a spouse who has owned before, both rebates can be reduced to reflect only your qualifying share.

Toronto land transfer tax at common prices

Figures computed with this site's land transfer tax engine — the same brackets used in the main calculator. First-time buyer column assumes both rebates apply in full.

Why the boundary matters

The MLTT follows the property's location, not your mailing address or the name of the neighbourhood on the listing. Etobicoke, North York, and Scarborough are all inside the City of Toronto and pay the double tax; step across the city boundary into Mississauga or Vaughan and the second tax vanishes — at a $850,000 price, that single fact is worth $13,475. Buyers comparing a Toronto home with a similar one just outside the boundary should run both numbers before deciding the Toronto home is only "a bit" more expensive.

Land transfer tax is not the only closing cost. Legal fees, an appraisal, a home inspection, title insurance, and — if your down payment is under 20% — the 8% Ontario PST on your CMHC insurance premium all land on the same day. A common planning range for total Ontario closing costs is 1.5% to 4% of the purchase price. Run the Ontario closing costs calculator for the full itemized picture, read the Ontario closing costs guide for what each line means, and see how this city fits the province as a whole on the Ontario mortgage calculators hub.