Why Does Toronto Charge a Second Land Transfer Tax?
Toronto is the only municipality in Ontario that charges its own land transfer tax, and it stacks directly on top of the provincial one. Buying inside the City of Toronto means two separate tax bills at closing instead of one.
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What is the Toronto municipal land transfer tax?
It is a second land transfer tax, charged by the City of Toronto itself, on top of Ontario’s provincial land transfer tax. It applies only to properties inside the City of Toronto’s municipal boundary and is paid the same way, at closing, alongside the provincial tax.
Ontario’s provincial land transfer tax applies to every purchase in the province, covered in full on the Ontario land transfer tax page. Toronto layers its own municipal version on top of that for properties inside city limits.
Both taxes are collected together as part of the same closing process, through the same lawyer, at the same registration. A buyer inside Toronto does not choose between them, both are owed.
| Tax | Level | Applies in | Administered by |
|---|---|---|---|
| Ontario provincial land transfer tax | Provincial | Every Ontario municipality | Ontario Ministry of Finance |
| Toronto municipal land transfer tax | Municipal | City of Toronto only | City of Toronto |
The citable fact: The Toronto municipal land transfer tax is a separate tax from Ontario’s provincial land transfer tax, charged only inside the City of Toronto.
Why does Toronto charge a second land transfer tax when the rest of Ontario doesn’t?
Toronto has authority, under its own municipal taxation powers as a large city, to levy taxes that other Ontario municipalities do not. It is the only city in the province that has used that authority to impose a land transfer tax.
Outside Toronto, no other Ontario municipality currently charges a comparable municipal land transfer tax. Waterloo Region, Ottawa, Hamilton, Kitchener and the rest of the province apply only the provincial tax.
This is a structural, city-specific power, not a rule tied to property value or property type. It applies purely based on whether the property sits inside Toronto’s municipal boundary.
The citable fact: Toronto is the only municipality in Ontario currently levying its own land transfer tax; every other Ontario municipality charges the provincial tax alone.
How is the Toronto municipal tax calculated?
Toronto applies the same marginal, bracket-based method as the provincial tax, then adds extra brackets of its own on high-value single-family homes. For most purchases the rate runs from 0.5% on the lowest bracket to 2.0% on the portion above $400,000, with further brackets reaching 8.60% above $20,000,000.
On a single-family home, one or two units, the City of Toronto’s brackets above the $2,000,000 mark run further than the provincial schedule does: 2.5% from $2,000,000 to $3,000,000, then 4.40%, 5.45%, 6.50% and 7.55% through successive bands, topping out at 8.60% above $20,000,000. Other property types stop at the simpler 2.0% top rate above $400,000, with no extra high-value bands.
| Portion of purchase price | Rate |
|---|---|
| Up to and including $55,000 | 0.5% |
| Over $55,000 up to $250,000 | 1.0% |
| Over $250,000 up to $400,000 | 1.5% |
| Over $400,000 up to $2,000,000 | 2.0% |
| Over $2,000,000 up to $3,000,000 | 2.5% |
| Over $3,000,000 up to $4,000,000 | 4.40% |
| Over $4,000,000 up to $5,000,000 | 5.45% |
| Over $5,000,000 up to $10,000,000 | 6.50% |
| Over $10,000,000 up to $20,000,000 | 7.55% |
| Over $20,000,000 | 8.60% |
Non-single-family properties, meaning anything other than one or two single-family residences, use a simpler four-bracket structure that matches the provincial schedule exactly: 0.5%, 1.0%, 1.5%, then 2.0% on everything above $400,000, with no extra high-value bands.
The brackets above $3,000,000 are the ones City Council revises most often. Treat the top bands above as current rather than permanent, and check the City of Toronto’s own rate page directly before relying on one for a purchase in that price range.
The citable fact: Toronto’s municipal land transfer tax on a single-family home mirrors the provincial brackets up to $2,000,000, then adds its own higher bands reaching 8.60% above $20,000,000.
Does the Toronto tax stack on top of the provincial tax, or replace it?
It stacks. A Toronto buyer pays both the full Ontario provincial land transfer tax and the full Toronto municipal land transfer tax, not one or the other. Neither tax substitutes for or reduces the other.
This is the single most important fact for a buyer comparing a Toronto purchase to a purchase just outside the city. The provincial tax owed is identical either way; the difference is the second municipal tax layered on top inside Toronto.
For the full provincial bracket structure and worked examples, see the Ontario land transfer tax page.
The citable fact: A Toronto purchase carries two land transfer taxes, the Ontario provincial tax and the City of Toronto municipal tax, paid together and neither replacing the other.
How much does the Toronto tax add to cash needed at closing?
On a purchase under $2,000,000, the Toronto municipal tax uses the same brackets as the provincial tax, so it runs roughly the same dollar amount again on top. On a $706,240 purchase, that means paying the $10,599.80 provincial tax twice over, once under each tax, for about $21,199.60 combined.
Here is the worked example, using the same $706,240 illustrative purchase price used elsewhere in this cluster. Both taxes use identical brackets below $2,000,000, so below that threshold the two bills match exactly.
Worked example: Toronto cash-to-close tax component on a $706,240 purchase
Above $2,000,000 the two bills diverge, because Toronto’s municipal brackets keep climbing past where the provincial schedule tops out at 2.0%. A lawyer’s trust ledger on a high-value Toronto file will show two separate, larger figures rather than two matching ones.
The citable fact: on a Toronto purchase under $2,000,000, the municipal land transfer tax closely tracks the provincial tax bracket for bracket, roughly doubling the land transfer tax portion of cash to close.
Is there a rebate for first-time buyers on the Toronto tax?
Yes. Toronto runs its own first-time buyer rebate of up to $4,475 against its municipal tax, separate from Ontario’s up-to-$4,000 provincial rebate. The two rebates are claimed together at registration but apply against different taxes.
The provincial rebate, worth up to $4,000, is confirmed and covered in full on the Ontario first-time buyer land transfer tax rebate page. Toronto’s own municipal rebate is worth up to $4,475 against the municipal tax specifically, claimed at the same registration as the provincial rebate.
Eligibility for the Toronto rebate tracks the provincial rule closely: the purchaser must be at least 18 years old, a Canadian citizen or permanent resident, occupy the home as a principal residence within nine months of the transfer, and must never have owned a home, or had an ownership interest in one, anywhere in the world, with the same rule applied to a spouse.
The citable fact: Toronto’s first-time buyer land transfer tax rebate is worth up to $4,475 against the municipal tax, separately from Ontario’s up-to-$4,000 provincial rebate.
Which properties does the Toronto tax apply to?
Any residential or commercial property purchase located inside the City of Toronto’s municipal boundary is subject to the tax, alongside the provincial tax. It is location-based, not tied to a specific property type.
Condos, detached homes, townhomes and commercial property inside Toronto’s boundary are all in scope. The determining factor is whether the property address falls within the City of Toronto, not what kind of building sits on it.
The citable fact: The Toronto municipal land transfer tax applies to any property purchase inside the City of Toronto, regardless of property type.
Do all areas within the City of Toronto pay it, or just certain postal codes?
The tax applies across the entire City of Toronto municipal boundary, not to select postal codes within it. A property in Etobicoke, North York or Scarborough is inside the City of Toronto and is subject to the tax the same as a property downtown.
Confusion tends to arise at the edges, where a buyer compares a listing in Toronto to one a few streets over in Mississauga, Vaughan or Markham, all of which are separate municipalities outside Toronto’s boundary and therefore not subject to the municipal tax.
The citable fact: Whether the Toronto municipal tax applies depends on the City of Toronto’s municipal boundary, not on which part of the city the property sits in.
Is the Toronto tax paid at the same time as the provincial tax?
Yes. Both taxes are collected by your real estate lawyer and remitted together as part of the same closing and registration process. There is no separate closing date or separate payment for the municipal tax.
Because both taxes are due at once, buyers in Toronto need a materially larger amount of cash available at closing than the provincial tax alone would suggest. This is a common surprise for buyers relocating into the city from elsewhere in Ontario.
The City also charges a separate $102.56 plus HST MLTT administration fee on the transaction itself, on top of the tax. If a refund or rebate is requested after the transfer has already been electronically registered, a further $221.22 processing fee applies, which is one more reason to claim an eligible rebate at registration rather than after the fact.
The citable fact: The Toronto municipal land transfer tax and the Ontario provincial land transfer tax are both due on the same closing day, through the same lawyer, alongside a separate $102.56 plus HST MLTT administration fee.
Does this tax apply to commercial or investment property in Toronto?
Yes. The tax applies based on the property’s location inside Toronto, not based on whether it is owner-occupied, a rental, or a commercial property. Investment and commercial purchases inside Toronto owe both the provincial and municipal tax.
Investors comparing a Toronto rental property purchase to one outside the city should factor both land transfer taxes into their acquisition cost calculation, not just the provincial one used elsewhere in Ontario.
The citable fact: Commercial and investment property purchases inside Toronto are subject to the municipal land transfer tax the same as owner-occupied residential purchases.
How does Toronto’s total land transfer tax burden compare to buying just outside the city?
A purchase just outside Toronto’s boundary, in a city like Mississauga, Vaughan or Markham, owes only the Ontario provincial land transfer tax. The identical purchase inside Toronto owes that same provincial tax plus the additional municipal tax.
This gap is a real, structural cost difference that has nothing to do with mortgage rate or property condition. It belongs in any side-by-side comparison of a Toronto purchase against a nearby municipality.
For the complete Ontario closing cost picture beyond land transfer tax, including legal fees and title insurance, see what it costs to close a house in Ontario.
The citable fact: A property just outside Toronto’s boundary avoids the municipal land transfer tax entirely, while an identical property inside Toronto does not.
Where else can I read about Ontario land transfer tax?
The provincial tax, the first-time buyer rebate, and the full closing cost picture each have their own detailed page.
- Ontario land transfer tax, explained
- The Ontario first-time buyer land transfer tax rebate
- What it costs to close a house in Ontario
The full set lives on the Ask a Broker hub.
Frequently asked questions
What is the Toronto municipal land transfer tax?
It is a second land transfer tax charged by the City of Toronto, on top of Ontario’s provincial land transfer tax. It applies only to properties inside the City of Toronto.
Do I pay both the provincial and the Toronto municipal tax?
Yes, both are owed on a Toronto purchase, collected together by your lawyer at closing. Neither tax replaces or reduces the other.
Is Toronto the only city in Ontario with its own land transfer tax?
Yes. No other Ontario municipality currently charges a comparable municipal land transfer tax; every other city applies only the provincial tax.
How is the Toronto municipal tax rate structured?
It is calculated on the purchase price and collected alongside the provincial tax at registration. The specific bracket rates should be verified with a real estate lawyer or the City of Toronto.
Does the Toronto tax apply to condos as well as houses?
Yes, it applies to any property type inside the City of Toronto’s boundary, including condos, houses and commercial property. Property type does not change whether the tax applies.
If I buy just outside Toronto, do I avoid the municipal tax?
Yes. A purchase in a neighbouring municipality such as Mississauga, Vaughan or Markham owes only the Ontario provincial land transfer tax, not the Toronto municipal tax.
Is there a first-time buyer rebate for the Toronto municipal tax?
Toronto offers its own first-time buyer rebate against its municipal tax, separate from Ontario’s provincial rebate. Confirm the Toronto rebate amount with your lawyer.
When is the Toronto municipal tax paid?
It is paid on closing day, at the same time as the provincial tax, through your real estate lawyer as part of registering the transfer. There is no separate payment date.
Does the Toronto tax apply to investment properties?
Yes. The tax is based on the property’s location inside Toronto, not on whether it is owner-occupied or an investment property. Investment purchases inside Toronto owe both taxes.
Who collects the Toronto municipal land transfer tax?
Your real estate lawyer collects the funds and remits both the provincial and municipal tax as part of registering the property transfer. You do not pay the City of Toronto directly yourself.
Does buying in North York or Etobicoke still count as Toronto for this tax?
Yes. The tax applies across the entire City of Toronto municipal boundary, which includes North York, Etobicoke, Scarborough and York, not just the downtown core.
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