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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.

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Taimoor Qureshi is an Associate Lawyer at Kormans LLP. You can reach Taimoor anytime at tqureshi@kormans.ca.

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