Are you a commercial property owner looking to buy or sell? You might be wondering if you pay land transfer tax when selling. Land transfer tax is an expense that needs to be considered in any commercial real estate transaction. It’s vital to make a note of all financial requirements as both the purchaser and seller of a commercial property. This article provides comprehensive knowledge on Ontario land transfer taxes so you can make informed decisions for your property purchases and sales.
What is Land Transfer Tax in Ontario?
When purchasing or disposing of a business real estate asset in Ontario, the Land Transfer Tax (LTT) is an unavoidable expense. Every Canadian province and territory has specific policies, rates, and waivers concerning LTT.
How is Land Transfer Tax Calculated in Ontario?
If you’re considering buying a commercial property in Ontario, the land transfer tax rate depends on your investment’s worth. The existing costs are as follows:
- 0.5% for properties up to $55,000
- 1.0% for values ranging from over $55,000 to $250,000
- 1.5% for amounts between $250,000 and $400,000
- 2.0% on properties above $400,000
- 2.5% over $2,000,000 where the land contains one or two single-family residences
Do You Pay Land Transfer Tax When Selling or Buying?
As the buyer of a piece of land, you must pay a land transfer tax when transferring ownership. However, it’s important to remember that exemptions may apply in some cases, and rates vary between provinces and territories.
Please note there’s an additional Non-Resident Speculation Tax (NRST) of 25% for non-Canadian citizens and foreign entities who buy property in Ontario. The seller isn’t responsible for paying land transfer tax when selling commercial property. The buyer must pay this amount to add it to the property’s purchase price.
Is the Land Transfer Tax Different for Commercial Properties?
When it comes to commercial properties, land transfer taxes can differ from residential purchases. The complexities inherent in commercial transactions can mean different rates and exemptions depending on your location and what kind of property you are dealing with. If you’re unsure, speak with a commercial real estate professional. These experts have extensive knowledge of provincial regulations, so you can confidently understand the costs associated with a transaction before any money changes hands.
Can I Avoid Land Transfer Tax?
In some cases, it’s possible to avoid land transfer tax. Ontario has a few exemptions and rebates that help you save on this expense when buying or selling commercial property.
- Certain transfers between spouses and common-law partners are exempt from the tax as long as they’re not considered a gift or settlement of property rights.
- Certain transfers from an individual to a family corporation, farmed land between family members, and life lease from a nonprofit organization or charity may also be exempt from the tax.
It’s essential to consult a professional to understand your options and decide if you qualify.
Sell Your Property with Zinati Realty
If you’re considering selling your commercial property, Zinati Realty is here to help make the process as smooth and easy as possible. Our specialists have years of experience in the Ottawa area. They can answer any questions you may have about LTT or buying and selling a commercial property in Ontario. Let’s discuss how our services can specifically benefit you — reach out to us today!