Every couple of years we seem to see Toronto increasing their municipal land transfer tax (LTT) on luxury properties.  It happened back in 2024, when increased rates were imposed upon sales in Toronto of properties over $3M, and it’s just happened again.

As of April 1, 2026, we have new rates for the LTT on the sale of properties over $3M in Toronto.  The provincial land transfer tax has not made any similar changes at any point, but the city of Toronto is rapidly increasing the cost to buy within the Toronto boundaries.

We looked at the anticipated increased revenue the city would make when they did this back at the start of 2024, we said they’d bring in about $27M in additional revenue as a result of the increases.  That sounds like a pretty significant amount, but keep in mind that back in late 2023, the City of Toronto’s updated Long Term Financial Plan and staff report showed an estimated $1.5 billion starting pressure for the 2024 operating budget and $29.5 billion in capital needs, which both form part of a $46.5 billion shortfall over the next 10 years.  The forecasted $27M would have brought in less than 2% of the amount needed to address the operating budget shortfall.

Given the city remains in difficult financial circumstances, it is clear that the increased tax didn’t help in a material fashion.  The latest increase is actually going to be far less impactful, as it is mostly increases of around 1%  for those higher price bands.

Let’s look at the new changes and how much additional money it could bring in – plus how many deals need to be lost as buyers decide to purchase their high end homes outside of the city.

Apples to apples.

We’re primarily focused on resale properties in our team and the data we can access is largely limited to residential resale properties.  As such, all of our analyses below are based on that data.   We’re after some broad (but accurate) implications of the new LTT rates, but we aren’t considering:

• non-MLS transactions
• builder/direct new-home and new-condo closings
• commercial / industrial / multi-residential / vacant land transfers
• other taxable conveyances the City records but that do not show up in our records

While some of the specific numbers of the implications of the new LTT rates will be understated, our analysis does paint a clear picture of what it means to the resale market.  Now that we’re officially covered, let’s get into it.

First, a history lesson.

We’ve created a handy chart to show the recent history of the Toronto Land Transfer Tax.  The orange column is what it was for about six years, and the blue columns show the rate increase amount that was put into place as of January 1, 2024.  The green column is the brand new rate increase amounts that apply to properties bought in the city as of April 1, 2026.

There have been no changes made to the land transfer tax due on the purchase of any properties up to $3M, but if you’re at that level or higher, we saw it go from a flat rate of 2.5% on any amount above the $3M level, to a graduated system.  The higher the price point, the higher the rate you’re paying on that portion of your purchase.

The latest round of increases have added about 1% to most of the price bands, with a range from 0.9% to up to 1.1%.

It’s all marginal.

A reminder that the land transfer tax is a marginal tax bracket, which means that for any price above a threshold, you pay:

• The full tax from all lower brackets
• Plus the tax on the portion that falls inside the current bracket

For example, a $1.2 million purchase does not pay 2.0% on the full $1.2 million. Instead, it pays:

• 5% on the first $55,000 = $275
• 0% on the next $195,000 = $1,950
• 5% on the next $150,000 = $2,250
• 0% on the remaining $800,000 = $16,000
• Which would bring the total municipal land transfer tax to $20,475.

This is relevant as we look at what impact these higher tax brackets will have on the sales taking place moving forward.

The past ain’t the future.

A caveat we often give is that what happened in the past is not necessarily indicative of what will happen in the future.  That being said, we need to base our analysis on certain assumptions, so the big assumption in our analysis here is that we’ll see similar types of transactions and numbers of transactions in 2026 as we did in 2025.  Here’s how the 23,475 sales in the city of Toronto were spread across the various price bands.

A few things about the above data are very relevant to our review.

First, 97% of the sales that took place in Toronto in 2025 were under $3M, which means the change that just took place is utterly irrelevant to those sales.  The Toronto LTT rate for these properties has not changed since 2017 and they can go merrily about their business.

The next thing worth pointing out is that the 740 sales that were in the $3M plus price bands last year were mostly in the $3M to $5M range.  59% of the sales were in the $3M to $4M band and another 22% were in the $4M to $5M band, so over 80% of the sales were in that $3M to $5M range.

If we assume that 2026 will see a similar spread of deals as we saw in 2025, how are these higher land transfer tax rates in those price bands going to bring in to the city in increased revenue?

It’s more, but it’s not a lot more.

We pulled the average price for each of the price bands for the sales in 2025 and then calculated the Toronto LTT for each of those bands.  This is relying on averages within each price band so it will not be 100% accurate, but it is enough to give us an idea of what 2026 will look like for increased revenue with the new increased LTT rates.

The city would have brought in about $450M in municipal land transfer tax in 2025 based on these sales.  With the new higher rates for the higher end price points, that means an estimated revenue for 2026 of about $458M, which works out to about $8M more in land transfer tax revenue for the city.

As we see very few sales at the $5M or above price point, the bulk of this $8M comes from sales in the $3M to $5M range.

$8M is still better than a kick in the pants, right?

The final aspect of the new LTT tax rates worth discussing is the fact that our model makes the assumption that the same level of sales take place in Toronto despite increasing costs for those buyers.  While it may be unlikely that a lower price point buyer will choose to buy outside of the city to save on the land transfer tax, we have had clients who considered the difference in closing costs significant.

At the higher price points that this latest round of LTT rate increases impacts, the difference between what you pay in Toronto versus surrounding municipalities amounts to significant dollars.

For example, a $5 million buyer in Toronto would pay about $272K in total LTT, of which $112K is the provincial portion.  If the buyer chose to purchase instead in another city such as Oakville, they would save $160K on their closing costs.  That’s a significant amount of money and while the latest increase in Toronto’s LTT rates doesn’t materially change the amount they pay, it is reaching levels that could result in some buyers deciding they’d rather put that money into a home purchase outside of Toronto.

While it is complicated to project how many lost deals it would take for the city to not see that projected $8M increased LTT from high end sales, we know that any purchase that moves outside of the city loses the entirety of the MLTT, not just the portion at the higher end.  Our calculation is that it would take about 67 of these high end deals leaving the city for that projected $8M in extra LTT revenue to disappear completely.

We regularly work with buyers and sellers impacted by decisions like this latest Toronto LTT rate increases, and it’s important that your agent understands the factors that influence the high end and luxury market in the city.  If you’re looking to buy or sell in the $3M plus range and want agents that understand how that segment actually works, get in touch!

Once upon a time, real estate was considered a stable but not particularly lucrative investment.  In these quaint times, people bought homes to live in, with the hope that they would appreciate somewhat over time.

Starting in the late 1990’s, real estate in Toronto and the GTA began an upward climb that continued, more or less uninterrupted, until 2022.  It was in that year that we saw the cumulative effect of many years of price appreciation and rising interest rates finally put a stop to the rapid price growth to which we’d grown accustomed.

Take a look at the chart below to see our average price in the GTA since 1994.

Back in July, 2016, we did a review of how long it takes to recover the transaction costs of buying and selling a property in the GTA.

We did this analysis because we were curious if a piece of commonly held wisdom – that it takes about five years to recover the costs of buying and selling real estate – was still accurate.  Our analysis found that depending on the housing type, it was taking just between about five months to 13 months to pay for the transaction costs of buying and selling real estate.   Clearly, what was once the case was no longer true!

Given that review was almost nine years ago, we thought it would be nice to update it so we could see how long it takes these days.  We almost immediately realized that we can’t do an updated version of the same analysis now.  Let’s go over why we can’t do as detailed an analysis in these current market conditions and then we’ll review what it actually costs to buy and sell real estate now.

We’ll start with how long it takes to recover transaction costs these days.

Let’s see, how does never sound?

Our analysis back in 2016 took place in a time where the average annual price increase for real estate ranged from about 7% per year for condo apartments up to almost 20% per year for detached homes.  With some reasonable assumptions about costs and projecting prices continuing to increase at the same level in the next year, we could calculate how long it would take to fully recover the costs of buying and selling real estate.

If we tried that now for each of the four major housing types, we’d have a range of year over year price changes going from -1.6% for condo apartments to 2.1% for detached homes.  If we segmented it further by Toronto vs the 905, we’d have stats like semi-detached homes dropping in value by 3.7% in Toronto, yet the same type of home rising by 2% in the 905 area.

With so much of a range between housing types and parts of the market, the average becomes far less reliable as a proxy for your home’s past performance and any predicted value.

For semi-detached homes and condo apartments, the negative price appreciation (or loss in value to be clear) means that if you wanted to calculate how long it would take to recover the costs of buying and selling, the answer would be never.  After all, you need your home to increase in value in order to cover the real estate commissions, land transfer taxes, bank fees and legal fees.  If it is going down in value, then you’ll never recover those costs.

Gimme the big picture review.

While it’s clear that the market differences in housing types and location mean the overall average isn’t as applicable as it once was, we can still do some basic analysis.

When we take the likely-not-applicable-to-your-home average price increase in 2024 and forecast it forward, it looks like this.

The above includes the Toronto Municipal Land Transfer Tax, so if you don’t buy in Toronto, it won’t be applicable.  We put in a 2.5% realtor commission on both the buy and the sell side, but if you think it would be lower for your case, then the above is a bit overstated.

The analysis tells us that, using the latest average prices and recent market history, it now takes about six years to recover the transaction costs.  Put another way, if you buy a place and sell it six years later, you’d have the same amount of money as when you bought it.  If you’re paying CMHC mortgage insurance premiums or breaking a mortgage term with a lender, then those costs would mean you’re actually losing a significant amount of money.

So, how much of my value is being eaten up by fees?

It is very expensive to buy and sell real estate and we often find clients who are unhappily surprised by how much it actually costs when you add in all the expenses, fees and taxes.

Let’s go through an example of what it costs, using a $1M home in Toronto.  That’s pretty close to the average price in the city as of January, 2025.

First off, let’s look at additional costs for when you buy.

• On a $1M purchase price, the Ontario Land Transfer Tax payable by the buyer is $16,475. That’s about 1.7% on top of your purchase price.
• In Toronto, you have the additional Municipal Land Transfer tax, which is the same as the Ontario LTT, namely $16,475. So, add another 1.7% in taxes onto your purchase.
• Bank and legal fees will likely be around $2,500 for most typical purchases. This does change somewhat based on the purchase price, but if you budget between a quarter percent to half a percent of your purchase price, you’d likely be in the right area.  Note that if you’re using a Class B or C lender, they will likely charge additional fees far in excess of what a major bank would likely charge.  It is not uncommon to see 1% fees on the mortgage amount!
• If you’re putting down less than 20% of the purchase price, you will also have to pay CMHC Mortgage Insurance fees. These range from 2.8% to 4% of your total mortgage cost, plus HST.  While the HST on the CHMC fees has to be paid up front, you can typically add the CMHC fees themselves onto your mortgage amount, so you get to pay interest on the fee you were charged!

Put it all together and you’re likely to see between 3.5% to 4% in taxes and fees on top of your purchase price.  If you use an alternate lender for your mortgage, add 1% onto to that and if you buy with less than 20% down, you’re looking at somewhere in the 3% to 4% range in additional costs from CHMC.

When your transaction costs are between 3.5% to 4% for a typical purchase and double that if you have a low down payment or don’t qualify with an A lender, you can see how expensive it can be to buy!

Now let’s turn to the sell side of the equation.  For our purposes here, we’re going to say you’re selling for the same $1M you paid when you purchased the home.

• Real estate commissions in Ontario are not set and can vary considerably. There are many different approaches that you can take, including private deals with no commissions, flat fee brokerages and so forth.  In addition, different parts of the GTA have slightly different typical commissions being charged by listing agents and offered to buying agents.  In our experience, real estate commissions of between 4.5% to 5% of the sale price are common.  HST is due on top of that, which adds another 0.65% to these costs.  For our $1M home example, it would cost about $60,000, including HST, in real estate commissions.
• Bank and legal fees are similar on the sell side as they are on the buy side, so for a typical sale, with one mortgage to discharge, somewhere around the $2,500 mark is likely a reasonable estimate. That works out to the same quarter of a percentage of the value of the home for the sale as it did on the purchase side.  Note that if you have a mortgage and you are breaking that mortgage before the end of the term (and not porting – or transferring – the mortgage to a new purchase) you will likely incur breakage fees from the lender.  These can be as little as three month’s interest or they can be a significantly more expensive amount based on what is called the Interest Rate Differential calculation.  Make sure you speak with your lender well before you make a transaction to understand the costs.

When you add the real estate fees and the bank and legal fees, along with the HST on both, you’re looking at costs that equal around 5% to 5.6% of the sale price.

If we combine the costs from buying and selling, most people end up paying transaction fees that equal 8.5% to 9% of the value of the home.  While some of these costs vary depending on the approach taken – and the professionals involved – make no mistake, it is expensive to transact in real estate in Ontario!

If you’re considering buying or selling real estate, then we’d love a chance to show you why our clients choose to hire us to help them through the process.  We believe that hiring the right agent means you pay less when you buy and get more when you sell.  This goes a long way to helping alleviate the transaction costs.  If that sounds appealing, get in touch with us to chat further.

The meaning of the idiom “a level playing field” is a situation that is fair to everyone, where everyone gets the same opportunity and a situation where everyone has an equal and fair chance of succeeding.  It apparently originated in the late 1900s when then was unfair advantage given to one team in a field game if there was a slope on the field.

While providing a level playing field is supposed to mean a fair competition, where no advantage is shown to one side, it is regularly used now in situations where we’re tilting the odds in favour of one side of a situation.

The Ontario government made an announcement on October 25, 2022 about amendments to the Non-Resident Speculation tax and immediately we saw a number of pundits talking about how this is levelling the playing field in real estate.  It’s a funny reaction to one group having an increased, additional tax on real estate purchases that other groups don’t incur when they buy.  If you’re a non-resident looking to buy in Ontario, it likely felt like the playing field just tilted in favour of residents, not towards a more level field.

As of October 25, 2022, the NRST rate in Ontario will be increased from 20% to 25% and continues to apply to all parts of the province. The NRST applies to the transfer of “designated land”, which is considered land that contains at least one and no more than six single family residences.

Back in March, the government raised the NRST from 15% to 20%. The new increase to 25% makes this the highest provincial tax in Canada that exists to deter foreign speculation in the housing market.

We ran the numbers of the costs to buy in Ontario if you’re a resident or a non-resident and thought we’d share it here.  There are a few different taxes that could apply depending on the type of property, the location of the property, the history of the purchaser and where the purchaser resides, so it can get a bit complicated.  We explain how it works and run the numbers for the different situations so it’s clear.  Well, clearer.

As of September, 2022, the average price for a property in Ontario is approximately $836,000.  We’ll use that as our proxy for our various calculations on the purchase.

There are four possible taxes that can be incurred when you buy residential real estate in Ontario.  Let’s review.

Buyer Tax #1 Provincial Land Transfer Tax

The first tax applies to ALL residential purchases in Ontario and is the Provincial Land Transfer Tax.

The tax is calculated on a sliding scale based on the purchase price, and for single family residences, there are thresholds at $55,000, $250,000 and $400,000.

There is a first-time home buyer’s refund of up to $4,000 on this tax that can be claimed once.  While there is a scale for this refund as well, if the home being purchased is over $368,000, then the maximum refund of $4,000 will be available.

You can find a LTT calculator here on the Toronto Regional Real Estate Board site.

Based on the September, 2022 average price for a property in Ontario of $836,300, the Provincial Land Transfer Tax payable by all purchasers is $13,201.  If you’re a first-time home buyer who has never owned real estate before, that will be reduced by $4,000 to $9,201.

Buyer Tax #2 Toronto Land Transfer Tax

The second possible tax on residential purchases in Ontario is the Toronto Land Transfer Tax.

It is just like the Provincial Land Transfer Tax but is paid to the City of Toronto for purchases that take place within the municipal boundaries of Toronto.  It is in addition to the Provincial Land Transfer Tax and is calculated exactly the same way, with the same tax payable.  Put simply, whatever you pay for the Provincial Land Transfer Tax, you will pay the same amount again to the City of Toronto if you are buying within the Toronto boundaries.

If you are a first-time home buyer, you can also receive a refund from the City of Toronto to be applied against the Toronto Land Transfer Tax.  The amount for the City of Toronto LTT refund is slightly higher than the Ontario LTT first-time buyer refund.  In Toronto, you can receive a refund of up to $4,475 against the Toronto LTT.

Based on the September, 2022 average price for a property in Ontario of $836,300, the Toronto Land Transfer Tax payable by all purchasers who buy within the municipal boundaries is $13,201.  If you’re a first-time home buyer who has never owned real estate before, that will be reduced by $4,475 to $8,726.

Buyer Tax #3 Harmonized Sales Tax

The third possible tax on residential purchases in Ontario is the Harmonized Sales Tax, or HST.

HST can be charged on residential purchases if it is a new or mostly new (over 90% new construction) home in Ontario.  While the HST calculation is straight-forward (13% of the purchase price is added to the cost of buying it), there are a few rebates that make it significantly more complex.

The HST New Housing Rebate is comprised of a federal rebate is equal to 36% of the federal portion of GST/HST, to a maximum of $6,300 and the Ontario provincial rebate, which is equal to 75% of the Ontario portion of GST/HST, to a maximum of $24,000.

Qualifying for the rebate can be challenging and depends on a number of factors such as type of property purchased, intended use (primary residence or investment use) and more.

If you are purchasing a new build in Ontario, always consult with your real estate lawyer to determine the tax consequences of your purchase and whether you qualify for any rebates.

For our purposes here, a home of over $450,000 will not receive a rebate on the federal portion (5%) and given the average price in Ontario is $836,300, that means that the $41,815 of federal HST tax will be an additional cost on the new build purchase.

The $66,904 (8% of $836,900) Ontario HST component may qualify for a rebate of up to $24,000, meaning that any new build will incur an Ontario HST that nets out to an additional $42,904 on the purchase.

If you are buying for investment purposes, you may be able to qualify for a New Residential Rental Property Rebate.  Just like with the HST New Housing Rebate, this rental property rebate will not apply on the federal component of the HST as our purchase price of $836,300 is over the maximum purchase price of $450,000.

The provincial component of the HST may qualify for a rebate of 75% of the HST paid, up to a maximum rebate of $24,000 per qualifying rental unit.  It is possible for both residents and non-residents to qualify for this, so based on our price of $836,300, that means we hit the maximum of $24,000 for this rebate.

When we put it all together, based on the September, 2022 average price for a property in Ontario of $836,300, the net HST you will pay on top of that price, if that property is a new build, is $42,904 in HST.  If you’re a non-resident, you would have to be renting the property out for a minimum of a year to qualify for the $24,000 rebate on the provincial portion, otherwise you’d have to add that on top of the $42,904.  Given that such a buyer is a non-resident, we will assume they are buying it as an investment and will rent it out, thus receiving the $24,000 rebate just like a resident buyer.

Buyer Tax #4 Non-Resident Speculation Tax

The fourth possible tax on residential purchases in Ontario is the Non-Resident Speculation Tax, or NRST.

The Non-Resident Speculation tax (NRST) is often colloquially called the Foreign Buyer’s Tax, so don’t be confused and think they are two separate things.  In Ontario, we call it the NRST and in British Columbia it’s known as the Foreign Buyer’s Tax, but in either case it’s a tax on non-residents.

As of October 25, 2022, the NRST in Ontario is a straight-forward 25% of the purchase price.  If you aren’t a Canadian citizen, a Permanent Resident or a Protected Person, you owe an additional 25% of the purchase price.  It applies to the transfer of “designated land”, which is considered land that contains at least one and no more than six single family residences.

Based on the September, 2022 average price for a property in Ontario of $836,300, the NRST payable by all non-resident purchasers is a whopping $209,075.

So, how level is that field now?

When we look at the four possible taxes on the average purchase price for a single-family residential property in Ontario, we see that the field is in fact clearly tilted in favour of residents versus foreign buyers.

While there are four possible taxes, the only one that doesn’t treat residents and non-residents equally is (naturally) the Non-Resident Speculation Tax (NRST).  On the average purchase of a property in Ontario of about $836,000, a foreign buyer will need to have $1,058,000 available to cover the closing costs for the home.  That’s an extra $222,000, comprised of the NRST and the Land Transfer Tax.

If the foreign buyer is interested in buying a new home and renting it out to a tenant, they will need to be prepared to add another $43,000 for the HST tax on the property.  If they want to buy that new home in Toronto, then the Toronto Land Transfer Tax adds another $13K onto the funds required.

When all is said and done, if a non-resident decides to buy a new construction property in Toronto and they’re lucky to find one at the average Ontario price of $836,000, they’re looking at over 33% in taxes on top of their purchase price.  When you add that $278,000 to the base purchase price, a non-resident  needs over $1.1M to buy that $836,000 home.

While not many people in the world would think Ontario real estate is a bargain, if you’re a non-resident considering buying in the province, the list price looks like a positive steal.    If you or someone you know is considering buying in Toronto or the surrounding areas, it pays to work with agents who understand the true cost of the deal.  Get in touch with us and we’ll help make sure it’s the right move.