Glossary
Land Transfer Tax
A provincial tax on transferring property title, paid by the buyer at closing and calculated as a percentage of the purchase price..
Land transfer tax is a provincial tax on transferring property title, paid when you buy a home. It is calculated as a percentage of the purchase price, typically using a tiered scale where higher portions of the price are taxed at higher rates, and it is normally collected on the completion date through your lawyer or notary.
How it is calculated and collected
Each province sets its own brackets and rates, so the amount owed depends on where the property is located and what it sells for. The tax is based on the price paid rather than the mortgage amount, so a larger down payment does not reduce it. It is normally settled on the completion date and is one of the larger items within your closing costs. Because it is a tax owing to government, it generally cannot be added to the mortgage balance.
Names and rules differ across Canada
Provinces use different names and structures for the same idea:
- Ontario calls it land transfer tax, and some municipalities add a separate municipal tax on top.
- British Columbia levies a property transfer tax.
- Quebec charges a transfer duty, widely called the welcome tax.
- Manitoba, New Brunswick, Prince Edward Island and Nova Scotia apply their own versions, with Nova Scotia's collected at the municipal level.
- Alberta, Saskatchewan and Newfoundland and Labrador do not levy a land transfer tax, though title registration fees still apply.
Why it matters to a borrower
Because the tax is due in cash at closing, it increases the funds you must have available beyond the down payment. A buyer who stretches to meet a minimum down payment can end up short at the finish line. Provincial rules, rate brackets and first-time buyer relief all change over time, so confirm the current figures with the province or municipality where you are buying before you make an offer.
First-time buyer relief
Several provinces offer a refund, exemption or reduced rate for eligible first-time buyers. The maximum relief, the price ceiling and the eligibility conditions vary by province and are updated periodically. Relief is usually claimed at the time of registration, so it must be set up correctly by your lawyer or notary rather than recovered later. Estimate the figure ahead of time using our provincial land transfer tax guide so it can be budgeted alongside legal fees, title insurance and adjustments.
Frequently asked questions
Do all provinces in Canada charge land transfer tax?
No. Ontario, British Columbia, Quebec, Manitoba, New Brunswick, Prince Edward Island and Nova Scotia levy a transfer tax or duty under various names. Alberta, Saskatchewan and Newfoundland and Labrador do not, though land title registration fees are still payable. Some municipalities, including Toronto, add a separate municipal tax on top of the provincial one.
Is land transfer tax the same as a welcome tax?
They describe the same general concept under different names. Quebec's transfer duty is commonly called the welcome tax, British Columbia uses property transfer tax, and Ontario uses land transfer tax. Each is triggered when title to a property changes hands, but the rate brackets, calculation method and first-time buyer relief differ from province to province.
Can land transfer tax be added to my mortgage?
Generally no. It is a government tax due at closing, and most lenders will not include it in the mortgage amount because the loan is limited by the property's value and your loan-to-value ratio. Plan to pay it from your own funds, along with legal fees, title insurance and closing adjustments.
Sources
Related terms
- Property Transfer Tax — Property Transfer Tax is British Columbia's name for its land transfer tax, charged to buyers when property title changes hands.
- Welcome Tax — Quebec's municipal transfer duty, commonly called the welcome tax, is charged to the buyer when ownership of a property changes hands.
- Closing Costs — Closing costs are the one-time fees, taxes, and charges paid on top of a home's purchase price, separate from the down payment.
- Down Payment — A down payment is the portion of a home's purchase price a buyer pays upfront, reducing the amount borrowed through a mortgage.
- Agreement of Purchase and Sale — The written contract between buyer and seller that sets the price, deposit, closing dates, and conditions of a real estate transaction.