Do You Know How To Beat Toronto New Land Transfer Tax?
November 26th, 2007 |
It seems that every week there is a new addition to Toronto’s convoluted and controversial tax system. The latest is the new Land Transfer Tax which will come into effect on February 1, 2008. It is expected that real estate activity will be heating up so that buyers will be able to close on their properties and avoid the new tax altogether. |
You will have to pay the Land Transfer Tax if you have purchased a property with a closing date on or after February 1, 2008. However if the closing date is on or after February 1, 2008 and the Purchase & Sale agreement was executed on or before December 31, 2007 you are eligible for a full rebate. First time buyers qualify for a rebate of up to $3,725.00 for both new and existing homes. For complete details on the Land Transfer Tax Rebate Program, follow this link: Transfer Tax Rebate Program
I’ve read many descriptions about how to calculate the Land Transfer Tax and personally I find them all very confusing. I found this Land Transfer Tax Calculator that you may find helpful in that it does the work for you. Just follow the link below and plug in the numbers: Land Transfer Tax Calculator
Here’s a way to beat the Toronto tax system. The Bank of Montreal will pay the Toronto’s Land Transfer Tax for you if you arrange your mortgage with them by February 29, 2008. Bank of Montreal customers who take out a new fixed, closed mortgage with a minimum five year term will have their Land Transfer Tax covered for up to 1.5% of the mortgage amount. Is this a good deal?
January 14th, 2008 at 3:23 pm
The BMO deal is not a great deal. Essentially all they are doing is giving you “cashback” to cover the new land transfer tax payment. Don’t think they give this to you free! It costs you on the rate. So instead of getting their best possible rate, you will get a slightly higher rate and the cash needed to cover the land tsfr tax. In the long run they will win out (as the banks always seem to do!!) A client is better off taking the lower rate vs. getting cashback…the bank wins out by getting more interest based on the higher rate over the 5 year term than you get by getting the “cashback”. And if you pay out the mortgage early, or move it to another institution, you will be forced to pay back some of the cashback (on a pro-rated basis).
Essentially it is just a way to get you to walk into a BMO branch to talk to them about mortgages.