Buying a house: the transfer tax

What is a land transfer tax?

A land transfer tax is a tax based on a percentage of the sale value of the property and is collected by the municipality in which it is located.

The provincial government has legally authorized municipal governments to collect taxes on the transfer of properties within their municipalities.  This tax was implemented by the provincial government when it ceased to redistribute to the municipalities a portion of the revenues generated by the property sales tax.

Many refer to this transfer tax as the "welcome tax" (which is a direct translation of "tax de bienvenue"), as it was named for the minister who implemented it.  If it truly were a "welcome tax", then tenants along with homeowners would be subject to this tarif.  It can be more readily compared to a sales tax.  As all other sales taxes, the transfer tax becomes the responsability of the purchaser.


How is the land transfer tax calculated?


The land transfer tax is a calculation based on the the tax base according to the following rates:


1. tax base which does not exceed $50,000 : 0.5%
2. tax base greater than $50,000 but which does not exceed $250,000 : 1%
3. tax base greater than $250,000 : 1.5%

This tax base for the land transfer tax is the greater of the following amounts:

1. the amount of the consideration provided for the transfer of the  property;
2. the amount of the consideration stipulated for the transfer fo the property;
3. the actual price of the property at the time of the transfer.


Jacinthe Dubé