Land transfer tax, worked through.

What land transfer tax actually is

A tax on the transfer of land, payable by the buyer, on closing. It is not part of the purchase price and it is not financed into the mortgage. It comes out of the cash you bring to the table, which is why it belongs in your budget from the beginning rather than as a surprise in week six.

Why Toronto is different

The City of Toronto levies its own municipal land transfer tax in addition to the provincial one. On a property inside the city boundary you pay both, which roughly doubles this line of your closing costs. A property in Markham, Vaughan or Mississauga pays only the provincial tax. The boundary is the city limit, not the phrase "Toronto area", and it is worth checking rather than assuming.

How the rates work

Both taxes are charged in bands, and each rate applies only to the portion of the price inside its band. A higher price does not push your whole purchase into a higher rate; it means the slice above each threshold is charged at the higher rate.

First-time buyer relief

Ontario refunds provincial land transfer tax up to a maximum for eligible first-time buyers, and Toronto offers a separate rebate against its municipal tax. Below a certain price the refund covers the tax entirely. Above it, you pay the difference. Your lawyer normally claims it at closing so it reduces the cash you need rather than arriving as a cheque months later. Eligibility turns on never having owned a home anywhere in the world, and on your spouse not having owned one while your spouse, which catches more people than expected.