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First-Time Home Buyer's Guide: Taxes in Toronto

first home buyer tax guide

REAL ESTATE NEWS

2/4/20263 min read

Hello, this is your trusted Toronto Realtor Chloe.

Are you planning to buy your first home in Toronto? While many buyers focus heavily on the down payment and mortgage approval, the Closing Costs -specifically taxes—can often come as a surprise shock.

Today, I will provide a comprehensive guide on the "Big 3 Taxes" you must know when buying a home in Toronto, along with the Rebate Information available for First-Time Home Buyers (FTHB). Understanding these costs upfront is crucial for accurate budgeting.

1. Provincial Land Transfer Tax (PLTT)

This is the standard tax applied to all property purchases within the province of Ontario. Whether you buy in downtown Toronto or the suburbs, this tax applies.

  • Rate: Calculated on a sliding scale based on the property value.

• 💡 The Benefit (Rebate): If you are a First-Time Home Buyer who has never owned a home anywhere in the world, you are eligible for a rebate of up to $4,000 . This amount is typically deducted immediately by your lawyer at closing, reducing your upfront cash requirement.

2. Municipal Land Transfer Tax (MLTT)

This is specific to the City of Toronto . If you purchase a property within Toronto's municipal boundaries, you must pay this tax in addition to the provincial tax. This is often referred to as the "Double Land Transfer Tax."

  • Applicable Areas: North York, Scarborough, Etobicoke, Downtown Toronto, etc.

  • Exempt Areas: Surrounding GTA areas such as Markham, Vaughan, Mississauga, and Richmond Hill do not charge this municipal tax.

• •💡 The Benefit: Fortunately, the City of Toronto also offers a rebate for first-time buyers of up to $4,475 . (Therefore, if you buy your first home in Toronto, you can receive a combined tax relief of up to $8,475 .)

3. HST (Harmonized Sales Tax)

Whether you pay HST (13%) on the purchase price depends entirely on the type of property you are buying.

A. Resale Homes

For most previously owned homes, HST is NOT applied to the purchase price.

  • Note: You will still pay HST on services related to the transaction, such as real estate commissions (paid by the seller), legal fees, and moving costs.

B. New Construction / Pre-construction

If you are buying a brand-new home from a builder, HST is applicable.

  • HST Rebate: In most cases, the purchase price listed by the builder already includes the HST rebate (assuming the buyer will use the home as their primary residence).

  • Investment Property: If you are buying a new condo as an investment to rent out, you must pay the rebate amount at closing upfront and apply to the CRA to get it back later (New Residential Rental Property Rebate).

• 2025/2026 Update: With recent housing policy updates, there are enhanced rebates and GST relief measures for qualifying new homes (especially those under $1 million). If you are considering a pre-construction assignment or a new build, please consult with a professional to verify your eligibility.

To summarize, if you are buying your first home in Toronto:

  1. You pay Provincial Tax (Save up to $4,000).

  2. You pay Toronto Municipal Tax (Save up to $4,475).

  3. If it is a Resale Home , you generally do not pay HST on the house price.

I always recommend setting aside approximately 1.5% to 2.5% of the purchase price for closing costs (taxes, legal fees, title insurance, etc.) to be safe.

If you need a detailed breakdown of land transfer taxes or want to explore listings that fit your budget, please feel free to contact me. I am here to help you navigate the Toronto real estate market with accurate data and analysis.

Contact

If you need my help please contact 416 333 653 or email to me chloe.jee@century21.ca