08 Apr Land Transfer Tax and its application in Québec
Land transfer tax is one of the heaviest costs that apply to a homebuyer in Canada. For every province, buyers have to pay a high LTT except for Saskatchewan and Alberta, whose fee is significantly low. This tax is not the same for any two regions but varies depending on the cost of the home as well as the province from which you are buying. Here is how it works in Québec.
In this region, three home price ranges as well as marginal taxes come into play; you have to compare the purchase prices with the marginal rate for each home price range.
•The first $50,000 of your price of purchase will incur a deduction of 0.5%.
•What you paid over that, between $50,000 and $ 250,000 will incur a tax of 1%.
•Any amount above $250,000 incurs a tax rate of 1.5%.
•There is a slight variation in Montreal, where a new tax bracket comes in between $250,000 and $500, 000, at the rate of 1.5%. Above that, the rate is 2%.
A 4-bedroom residence in Quebec will cost $275,000.
0.5% of the first $50,000 equals to $250.
The next $200,000 (250,000-50,000) will incur $2,000(1%).
The balance, $ 25000(275,000-250,000) will attract a tax of $ 375, which is the 1% indicated earlier.
The total here will be:
Land transfer tax rebates in Québec.
There are no rebates for those buying homes for the first time, so the homeowner pays the full amount.
When thinking about buying a home, you need to look further than just the purchase price. You will have to budget for additional costs such as taxes and other closing costs. It pays off to look around, as different provinces in Canada will have different rates and sets of parameters that implement the procedures for closing costs. If you fail to look at all the factors involved before making any purchase, you might end up realizing that it costs a little more than you thought, so make sure you stay informed.