Real Estate

Land Transfer Tax on New Construction Homes

  • Last Updated:
  • Jul 13th, 2021 1:59 pm
[OP]
Deal Addict
Feb 26, 2016
1503 posts
492 upvotes
Vaughan

Land Transfer Tax on New Construction Homes

New construction homes are normally priced inclusive of HST and rebates. A new construction home listed by the builder for $1,500,000 would actually be $1,348,672.57 pre-HST. I.e. ($1,348,672.57 x 1.13) - 24,000 = $1.5MM.

Is the land transfer tax calculated on the $1,500,000 or the $1,348,672.57? Logic and my research indicates that it should be on the pre-HST amount. Otherwise, the CRA is taxing on top of tax which makes no sense but then again, I wouldn't be surprised if the CRA scams us this way.

My research seems to indicate that it should be based on pre HST amount.

https://www.fin.gov.on.ca/en/bulletins/ltt/1_2010.html

"Value of the Consideration
The value of the consideration, as defined in subsection 1(1) of the Land Transfer Tax Act, is the base upon which land transfer tax is calculated.

HST and the Value of the Consideration
When HST applies to the purchase of land or an interest in land, the value of the consideration does not include the amount of HST paid on the purchase price. Accordingly, land transfer tax is not eligible on the HST paid."

However, I've seen some threads in this forum where members have said it is based on the builder listed price (or post-HST amount). Can someone confirm? Thanks
4 replies
Jr. Member
Nov 15, 2019
109 posts
48 upvotes
Land Transfer Tax is paid on the purchase price net of HST.

Sometimes with private builders, Land Transfer Tax can be mistakenly paid on the full purchase price. If this happens, you can apply for a refund of the LTT that should not have been paid. I am a tax lawyer, and I can assist with refund applications. Thanks.
[OP]
Deal Addict
Feb 26, 2016
1503 posts
492 upvotes
Vaughan
TorontoHSTRebates wrote: Land Transfer Tax is paid on the purchase price net of HST.

Sometimes with private builders, Land Transfer Tax can be mistakenly paid on the full purchase price. If this happens, you can apply for a refund of the LTT that should not have been paid. I am a tax lawyer, and I can assist with refund applications. Thanks.
Sorry, for clarity when you say "net of HST", are you referring to the pre-HST number of $1,348,672.57 or the $1,500,000 which is the number inclusive of HST net of the rebate?
Deal Addict
Mar 14, 2006
4406 posts
812 upvotes
net of HST = pre-HST number of $1,348,672.57
[OP]
Deal Addict
Feb 26, 2016
1503 posts
492 upvotes
Vaughan
mingyang wrote: net of HST = pre-HST number of $1,348,672.57
Thanks for the clarification. Whenever I read net of HST, I always think Purchase Price Plus HST net of Rebates. Seems like an odd term to equate net of HST as Pre-HST.

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