By choosing to purchase real estate in the Addington Highlands instead of a more expensive house for sale in Scarborough or another crowded area, you are saving a certain amount of money. However, there are some costs associated with buying real estate in Ontario that it is simply not possible to avoid. One of these costs is the land transfer tax. We've created this article to help you familiarize yourself with Ontario's land transfer taxes so you can create an accurate budget for the purchase of your new home.

Since almost all provinces and states charge a land transfer tax in order to fill the region's coffers and offset the cost of registration, you cannot get around it by buying elsewhere. However you wouldn't have to pay it if you were to look for cottage rentals in PEI instead, as there's no transfer tax if there's no transfer in property ownership. Transfer taxes must be paid on all transfers of ownership, whether it's from the province to you or from another private owner to you, even if you are only buying a share or interest in the property along with a number of others.

The tax itself is calculated based on the worth of the property, this includes the fair market value of the land as well as the value of any buildings and fixtures (i.e. the fittings inside the buildings) that are on the land. This means if you buy a more expensive unit of Riverdale Homes, even if it's located on the same size plot as the lesser model, you will have to pay more in land transfer taxes to buy the property. Additionally, if you're buying out a pre-existing mortgage belonging to the old owner you'll have to pay tax on whatever's left to pay off.

The percentage charge works on a sliding scale: you pay .5% of the value up to $55,000, 1% to $250,000, 1.5% over $250,000 and 2% if the value is over $400,000. The tax is paid at the time of registration (i.e. it is a closing cost). First time home owners are eligible for a refund of up to $2,000 if they live in their house more than 9 months after the purchase. Community centers like KMFRC may be able to help you with your application.

The province of Ontario isn't the only entity that charges a land transfer tax. Some cities charge an additional tax on top of this. Toronto is one of them. If you were choosing from the Etobicoke MLS you would have to keep this in mind, but if you're buying in the Addington Highlands you don't have to worry about this. You don't have to worry about any land transfer tax if you're transferring it to a family member or charity.