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Items Subject to Land Transfer Tax on Pre-construction Purchases!
Taimoor Qureshi
March 28, 2024
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In a previous blog post, we looked at the details for the eligibility of the HST Rebate on a pre-construction purchase in Ontario. In this blog post, we will go over items on a new build purchase transaction on which land transfer tax has to be paid.
When a freehold; condominium; or land is purchased in Ontario, land transfer tax has to be paid by the purchaser which is calculated based off the purchase price.
On top of the purchase price, there are additional items which are subject to land transfer tax and as such, purchasers on a pre-construction purchase should keep that in mind.
Some of the items which fall under such additional consideration on which land transfer tax has to be paid include but are not limited to extras and upgrades that a purchaser may have opted for (upgraded flooring; cupboards; kitchen countertops; backsplash etc.); in addition to any extras and upgrades, land transfer tax must also be paid on additional adjustments such as development levies; education levies; park levies; installation costs of utility meter(s); Law Society levy charges; Tarion Warranty enrolment fees; tree planting fees; driveway paving fees; Canada Post mailbox installation fees etc.
In addition to the above, if the purchaser obtained rights to purchase the pre-construction property via an assignment and paid the assignor any premium on top of the purchase price on the Builder APS, any such premium is subject to land transfer tax as well.
Land transfer tax on all the above items can definitely add up. As such, it is important to plan accordingly when calculating closing costs on a pre-construction purchase.
For more information about this topic, please feel free to contact one of our lawyers! Email us at info@kormans.ca or call (905) 270-6660.
Taimoor’s practice areas include Commercial law; Commercial Leasing; Corporate law; Mortgages; Residential Real Estate; and Wills and Estates.Taimoor was called to the Bar of Ontario and joined Kormans LLP in January 2019.Prior to joining Kormans LLP, Taimoor articled and clerked for boutique law firms where his exposure to residential and commercial matters from beginning to end helped develop his knowledge and skills in the aforementioned areas of la.
Taimoor is a strong believer in efficient client communication and does his best to keep clients as up to date as possible along all steps of a transaction.In his spare time, Taimoor is an avid follower of all major sports and enjoying the outdoors during the summer months.
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