Closing costs catch a lot of first-time buyers off guard, and land transfer tax is usually the biggest line. Ontario also has refunds and rebates that can cut it down, but most of them have to be claimed. Here is how they work.
This is general information, not legal or tax advice. Your real estate lawyer will calculate the exact figures on your purchase.
How Ontario’s land transfer tax is calculated
Ontario charges land transfer tax in tiers, and each rate applies only to the slice of the price inside that tier. According to the Ontario Ministry of Finance, the rates are:
- 0.5% on the first $55,000
- 1% from $55,000 to $250,000
- 1.5% from $250,000 to $400,000
- 2% above $400,000
- 2.5% on the portion above $2 million, for homes with one or two single-family residences
On a $500,000 purchase, that works out to $275 + $1,950 + $2,250 + $2,000, or $6,475. You can try your own price with the land transfer tax calculator.
The first-time buyer refund
Ontario refunds up to $4,000 of that tax to eligible first-time buyers, the province says on its refund page. Using the rates above, $4,000 covers the entire tax on a home priced at about $368,000 or less. On the $500,000 example, it brings the bill down to $2,475.
To qualify, the province lists these conditions:
- You are at least 18 and a Canadian citizen or permanent resident.
- You have never owned a home, or an interest in one, anywhere in the world.
- If you have a spouse, they have not owned a home while you were married.
- You move in as your principal residence within nine months of closing.
The refund can be claimed when the purchase is registered, which is usually handled by your lawyer. If it wasn’t, you can still apply to the province within 18 months. Ask your lawyer at the start whether they will claim it for you.
Buying a new home: two more rebates
If you are buying a newly built home or condo from a builder, there are federal and provincial tax rebates to ask about.
The federal first-time home buyers’ GST rebate removes the GST on new homes up to $1 million, according to the Department of Finance. It phases out between $1 million and $1.5 million, and nothing is available above that. The Canada Revenue Agency says the rebate is worth up to $50,000 and applies to agreements signed on or after March 20, 2025. Builders can credit it at closing, or you can apply to the CRA yourself, usually within two years.
The definition of a first-time buyer here is different from Ontario’s. Federally, you must not have lived in a home you or your spouse owned in the current or previous four calendar years.
Ontario also has a temporary enhanced new housing rebate. Under the CRA’s notice, it rebates the 8% provincial part of the HST, up to $80,000, on homes up to $1 million. It applies to purchase agreements signed between April 1, 2026 and March 31, 2027, and it is not limited to first-time buyers.
Ask the builder whether the price in your agreement includes these rebates or whether you need to claim them, and get the answer in writing.
A short checklist
- Budget the full land transfer tax, then treat the refund as a reduction at closing, not as money you can count on before you’ve confirmed you qualify.
- Tell your lawyer you are a first-time buyer before closing.
- Keep the 18-month and two-year claim windows in your calendar.
- On a new build, confirm the dates on your agreement against the program windows.
Rules and program dates change, so confirm the details with your lawyer or accountant. If you’d like help working out the full closing costs on a purchase, you can reach me through the contact form.
Sources: Ontario: Land Transfer Tax; Ontario: Calculating Land Transfer Tax; Ontario: Refunds for First-Time Homebuyers; Department of Finance Canada: GST relief for first-time home buyers; Canada Revenue Agency: First-time buyers can save more on new homes; Canada Revenue Agency: Ontario Enhanced New Housing Rebate.
Photo: Filip Szalbot on Unsplash.