Land or Property Transfer Tax
—Peter Tomlinson, CCH Canadian Limited
On June 1, 2012, New Brunswick increased its land transfer tax rate from 0.25% to 0.5%. In light of that recent change, this seems like a good time for a basic review of the various land transfer taxes and fees in effect in the provinces and territories.
Ontario, Quebec, British Columbia, Manitoba, Nova Scotia, New Brunswick, and Prince Edward Island levy a land transfer tax, or property transfer tax, applicable on the purchase and sale of real property, payable when the transfer is registered. In Quebec, this is referred to as “duties on the transfer of immovables”. Although the remaining provinces and territories do not technically levy a land transfer tax, they do charge registration fees based on the value of the property being transferred. These fees, which can be significant in some cases, are sometimes informally referred to as land transfer tax, but the rates are generally less than the land transfer taxes applicable in the other jurisdictions.
In certain jurisdictions, there may be additional land transfer taxes imposed by individual municipalities. Except for Nova Scotia, where the rates are set by individual municipalities, and the land transfer tax imposed by the City of Toronto, this article will focus on taxes and fees imposed by a province or territory.
Example of Taxes and Fees
To provide a brief comparison of the various rates across jurisdictions, it is useful to consider an example. The following taxes or fees apply to the purchase of a $200,000 property located in the province or territory specified below:
Alberta does not levy a land transfer tax, and only nominal registration fees are charged based on the value of the property being transferred and any mortgage. According to the Tariff of Fees Regulation, Alta. Reg. 120/2000, the registration fee is $50, plus $1 for every $5,000 of the property value; if there is a mortgage, another $50, plus $1 for every $5,000 of the mortgage amount, is due.
The Property Transfer Tax Act, R.S.B.C. 1996, c. 378, imposes a tax payable on the transfer of property in British Columbia. Property transfer tax is 1% of the first $200,000 of the fair market value of the transaction, plus 2% of the remaining value over $200,000.
In Manitoba, land transfer tax is charged pursuant to Part III of The Tax Administration and Miscellaneous Taxes Act, C.C.S.M., c. T2. Property transfers are taxed at the following rates: 0% on the first $30,000 of fair market value; 0.5% of the value between $30,000 and $90,000; 1% of the value between $90,000 and $150,000; 1.5% of the value between $150,000 and $200,000; and 2% of the excess over $200,000.
The recently amended Real Property Transfer Tax Act, S.N.B. 1983, c. R-2.1, governs the taxation of real property transfers in New Brunswick. For properties registered before June 1, 2012, the tax rate was 0.25% of the greater of the consideration for the transfer or the assessed value of the real property. On or after June 1, 2012, the tax rate increased to 0.5%.
Newfoundland and Labrador
In Newfoundland and Labrador, land transfer tax is not payable, although a considerable registration fee equal to $100 plus 0.4% of the value of the property in excess of $500 is imposed by the province. In addition, Newfoundland and Labrador charges significant fees when registering a mortgage. These fees are $100 plus 0.4% of the value of the mortgage in excess of $500. While several jurisdictions charge a nominal fee for registering a mortgage, Newfoundland and Labrador’s fee is notably higher, making the total fees for a typical home purchase on par with the land transfer taxes charged in several other jurisdictions. The registration fees in Newfoundland and Labrador are set by the Minister under the auspices of the Registration of Deeds Act, 2009, S.N.L. 2009, c. R-10.01.
The Northwest Territories does not impose a land transfer tax, but assesses registration fees based on the value of the property transferred. For property valued less than $1 million, the fees are $1.50 for every $1,000 (or part of $1,000) of property value, subject to a minimum fee of $100. For properties worth more than $1 million, the fee is $1,500 plus $1 for every $1,000 (or part of $1,000) over $1 million. For mortgages, the fee is $1 for every $1,000 (or part of $1,000) of the mortgage amount, subject to a minimum fee of $80. The registration fees are governed by the Land Titles Act, R.S.N.W.T. 1988, c. 8 (Supp.) and the Land Titles Tariff of Fees Regulations, N.W.T. Reg. 062-93.
Provisions relating to the imposition of “deed transfer tax” in Nova Scotia are contained in Part V of the Municipal Government Act, S.N.S. 1998, c. 18. The rates are set by each municipality and may not exceed 1.5% of the value of the property transferred. Halifax imposes the maximum 1.5% rate, and a list of rates for other municipalities is available on the Service Nova Scotia Web site at http://www.gov.ns.ca/snsmr/property/default.asp?mn=282.46.1064.1100
Land transfer tax is not levied in Nunavut, but the territory charges registration fees based on property values. For property valued less than $1 million, the fees are $1.50 for every $1,000 of value, subject to a minimum fee of $60. For properties worth more than $1 million, the fee is $1,500 plus $1 for every $1,000 over $1 million. For mortgages, the fee is $1 for every $1,000 of the mortgage amount, subject to a minimum fee of $40. The registration fees are set by the Land Titles Act, R.S.N.W.T. (Nu.) 1988, c. 8 (Supp.) and the Land Titles Tariff of Fees Regulations, N.W.T. Reg. (Nu.) 062-93.
In Ontario, land transfer tax is governed by the Land Transfer Tax Act, R.S.O. 1990, c. L.6. The general rate of tax is 0.5% of the first $55,000 of the value of consideration, 1% of the next $195,000, and 1.5% of the balance over $250,000. If the property consists of one or two “single family residences” there is an additional 0.5% tax on the value of consideration over $400,000 (for an effective tax rate of 2% on consideration exceeding $400,000). A property will likely be deemed a “single family residence” if it was designed as a residence (with kitchens, bathrooms, and so on), and not as a place of business.
In addition to the provincial tax, the City of Toronto imposes a municipal land transfer tax equal to 0.5% of the first $55,000 of the purchase price, and 1% of the purchase price between $55,000 and $400,000. For properties valued over $400,000, the rate is 2% for residential and 1.5% for commercial or industrial (with a 2% rate for commercial or industrial properties worth over $40 million).
Property transfer tax in Prince Edward Island is levied by the Real Property Transfer Tax Act, R.S.P.E.I. 1988, c. R-5.1. The rate is 1% of the greater of the consideration of the transfer or the assessed value of the real property.
According to the Act respecting duties on transfers of immovables, R.S.Q., c. D-15.1, municipalities in Quebec must collect duties on the transfer of “immovables” (a civil law term for real property) situated within their territory. While the duty is collected by the municipality, it is imposed by and applies throughout the province, and may be considered a provincial rather than municipal land transfer tax. The rate of transfer duties is 0.5% on the consideration up to $50,000; 1% on the consideration in excess of $50,000 but not in exceeding $250,000; and 1.5% on the balance exceeding $250,000.
Saskatchewan does not impose a land transfer tax, but registration fees for a transfer are based on the value of the property. For properties valued under $500, there is no fee. For properties valued between $501 and $8,400, the fee is $25. For properties valued over $8,400, the fee is 0.3% of the value. The registration fees are set by the Information Services Corporation under the authority of the Land Titles Act, 2000, S.S. 2000, c. L-5.1.
Yukon does not impose land transfer tax, and charges only nominal registration fees in accordance with the Land Titles Act, R.S.Y. 2002, c. 130 and the Tariff of Fees, Y.O.I.C. 2002/142. The highest fee is only $29.25 plus $0.25 for each$1,000 (or fraction thereof) of property value in excess of $25,000. Similarly, to register a mortgage the highest fee isonly $42 plus $0.25 for each $1,000 (or fraction thereof) over $50,000.
Exemptions and Rebates
While land or property transfer taxes (or registration fees) apply to most transfers of real property, exemptions may apply in some cases. Most notably, Ontario, British Columbia, and Prince Edward Island offer land transfer tax rebates to qualifying first-time homebuyers. Any other exemptions are quite limited, such as transfers between family members or closely-related corporations.For additional details about exemptions and other matters related to property transfer taxes and fees, please consult the relevant provincial or territorial statutes and the commentary in CCH’s Provincial Tax Reporters.