Toronto's Second Land Transfer Tax, Explained
Buy inside the City of Toronto and you pay land transfer tax twice — once to Ontario, once to the city — on the same purchase, on the same day. For first-time buyers there are two rebates, not one. Here is how Toronto's tax works, what it adds to a real purchase, and how the double rebate softens it.
Two taxes, one closing
Ontario's land transfer tax applies to every purchase in the province; our land transfer tax guide explains it in full. Toronto is the only Ontario municipality with its own additional land transfer tax, charged on properties within the city boundaries, at rates that mirror the provincial structure for homes:
- 0.5% on the first $55,000 of the price
- 1.0% on the portion from $55,000 to $250,000
- 1.5% on the portion from $250,000 to $400,000
- 2.0% on the portion above $400,000
Because the city's brackets match the province's, the practical rule for a Toronto home is simple: calculate the Ontario tax, then pay it twice. The two are collected together at registration on closing day, which is why Toronto buyers' closing costs run noticeably higher than the same purchase in Mississauga, Vaughan or Markham — the border is worth real money, a fact worth knowing if your search straddles Steeles Avenue.
A worked example: an $800,000 Toronto home
Ontario tax: $275 (first $55,000) + $1,950 (next $195,000) + $2,250 (next $150,000) + $8,000 (the remaining $400,000 at 2%) = $12,475. Toronto tax: the same calculation, $12,475. Total land transfer tax on closing day: $24,950. That is roughly 3.1% of the purchase price going to transfer taxes alone, and it is cash — your mortgage does not cover it, which is why Toronto down-payment planning that ignores the second tax falls short at the lawyer's office.
The two first-time buyer rebates
First-time buyers get relief from both levels, and the rebates stack:
- Ontario's rebate: up to $4,000 off the provincial tax.
- Toronto's rebate: up to $4,475 off the city tax.
Combined, a qualifying first-time buyer saves up to $8,475 — on the $800,000 example above, the bill drops from $24,950 to $16,475. The qualification rules track the provincial ones (never owned a home anywhere, spouse rules apply, must occupy as your principal residence), and both rebates are usually applied at closing through your lawyer rather than claimed afterwards — confirm your lawyer has both in the file, because an unclaimed Toronto rebate is paperwork nobody will chase for you. How these fit with the other first-buyer programs is mapped in every Ontario first-home program, stacked.
Edge cases worth knowing
New construction in Toronto pays both taxes too — on top of HST considerations for new builds, which have their own rebate system. Pre-construction bought years ago is taxed on the price and rules at closing, not at signing. Buying just outside the boundary removes the city tax entirely — a legitimate planning fact when comparing a Toronto address with an Etobicoke-adjacent one in Mississauga (Etobicoke itself is inside Toronto; the savings start west of Etobicoke Creek). And investment properties get no rebates — the double tax is simply a cost of Toronto acquisitions, to be underwritten like any other.
Next step
Budgeting for a Toronto purchase? Build the double tax into your numbers from the first listing, not the last one. Browse homes for sale in Toronto with your true cash-to-close in hand — down payment, both taxes, and closing costs included.