There are many different tax credits and tax rebates for Canadians who are purchasing their first home in Canada. The land transfer tax rebate is just one that can benefit you. To qualify for the land transfer tax rebate, you must live in either Ontario, British Columbia, or Prince Edward Island.
This rebate is to help first-time homebuyers offset the costs of land transfer tax in some of the most costly parts of the country they live in. You must be in one of these three provinces listed above. The rebate also differs slightly if you live in the city of Toronto, Ontario. Let’s learn a bit more about how this tax works.
British Columbia offers the highest maximum rebate of $8000, while Toronto has $4475, in the rest of Ontario $4000, and PEI at $2000.
Since BC has the highest priced homes, the rebate will cover your land transfer tax (LLT) to an amount of $500,000. The maximum for Toronto is $400,000, the rest of Ontario $363,333, and PEI at $200,000.
In Toronto and Ontario, if your spouse does not qualify, you may only get a 50% refund. There may also be partial refunds available for various reasons. There are no partial refunds offered in PEI. In BC, you can qualify for a partial refund if your house has been valued at over $500,001 but under $524,999.
You may wish to double check on the CRA website first before doing your taxes for the year you purchased your home. But the criteria is the same for all the provinces and cities.
In order to apply for the land transfer tax rebate, you must either be a Canadian citizen or a permanent resident of Canada. You must also be an adult of over 18 years old.
After purchasing your home, you must move into it within nine months of buying it. You must also be a first time home buyer.
This next part is where it gets tricky. It’s a bit different than the first time home buyers tax credit where either you or your spouse can qualify and gain 100% of the benefits.
If either you or your spouse has owned a home during the time that they have been your spouse, then they will be disqualified. However, if you live in Ontario or Toronto, you will at least get a 50% refund. There may be a partial refund offered in BC, but you’ll have to fill out the forms to work out the exact amount.
If you do qualify to claim the land transfer tax rebate, then your real estate lawyer will assist you in filling out all the pertinent paperwork. You have two options for applying for the land transfer tax rebate. The first is to file it electronically from the Land Transfer Tax Refund for First-Time Homebuyers website or to download the pertinent forms and fill them out by hand.
Do your research first, so you don’t miss out on the land transfer tax rebate during one of the most significant purchases of your life. The guidelines and numbers are always changing so always make sure you talk with your accountant, legal team and the CRA to make sure you are eligible.