Do You Pay Sales Tax When Buying a House?

HST on resale vs. new construction

• Resale (used) home: generally no HST. The sale of a previously occupied residential property is exempt from HST under the Excise Tax Act.
• New construction or substantially renovated home: 13% HST on purchase price. The federal new-housing rebate and Ontario new-housing rebate may reduce the net cost for owner-occupied buyers below specified price thresholds, often credited at closing by the builder in exchange for an assignment of the rebate.
• Investor-purchased new homes: different process — the New Residential Rental Property rebate, claimed by the buyer after closing on filing a rental-purpose declaration.
• Assignment sales of pre-construction: HST treatment can be complex and has been the subject of recent CRA guidance changes. Get specific tax advice before assigning.

Ontario Land Transfer Tax (LTT)

Ontario LTT is a marginal-rate tax on the purchase price, payable at closing through your lawyer. The marginal rates step up across price brackets, with the top bracket applying above $2 million on residential properties (and an additional bracket at higher thresholds for multi-residential and certain commercial). On a $1.0M residential purchase outside Toronto, LTT runs roughly $16,475 before any rebates.

First-time buyers may qualify for an Ontario LTT rebate up to a published cap (currently $4,000 for first-time buyers). Above the cap, the rebate is the full amount and the buyer pays the difference. Confirm current rates and rebate amounts on the Ontario government’s LTT page — they are updated periodically and the calculator on our LTT calculator page is kept current with each change.

Toronto Municipal Land Transfer Tax

If the property is inside the City of Toronto boundary (the old Metropolitan Toronto borders — not the GTA more broadly), the buyer also pays the MLTT — a separate municipal tax with rates that closely mirror the provincial structure (and recently includes additional brackets for higher-priced homes above $3M, $4M, $5M, $10M, and $20M). The combined provincial + municipal LTT in Toronto is roughly double the LTT outside the city. First-time buyers may also qualify for a Toronto MLTT rebate up to a cap.

On a $1.0M Toronto resale home, combined LTT (provincial + municipal) is approximately $32,950 before any first-time-buyer rebates. On a $1.5M Toronto home, the combined LTT is roughly $52,950. On a $3M Toronto home, the combined LTT runs about $122,950, and rises sharply above that price as the higher Toronto MLTT brackets (3.5% on $3M–$4M, 4.5% on $4M–$5M, 5.5% on $5M–$10M, 6.5% on $10M–$20M, 7.5% above $20M, all introduced January 1, 2024) begin to engage. These are not small numbers — budget for them at the offer stage, not the closing-day stage.

Other taxes and adjustments at closing

• Property tax adjustments to the closing date — you reimburse the seller for any prepaid taxes, or vice versa.
• Utility adjustments (water, gas, hydro, sometimes condo fees) — typically minor.
• Title insurance premium (one-time, $250–$700+) — protects against title defects, boundary issues, and survey gaps.
• Non-resident buyer taxes may apply for foreign buyers under federal (Foreign Buyer Ban with exceptions) and provincial (Ontario Non-Resident Speculation Tax — NRST) regimes.
• Mortgage default insurance (CMHC, Sagen, Canada Guaranty) if down payment is below 20% — added to mortgage principal, not paid upfront.

Plan your closing budget early in the search

On a $1M Toronto resale home with both provincial and municipal LTT, expect roughly $32,950 in combined LTT alone (before any first-time-buyer rebates). Factor in legal fees ($1,800–$2,800), title insurance ($300–$700), property tax and utility adjustments, and your total closing-day cash need can land near 1.7–2% of purchase price on top of your down payment.

Use our land transfer tax calculator for a property-specific LTT estimate. For the full step-by-step buying process from pre-approval to keys, see our Ontario buying guide.

Frequently Asked Questions

Is the new-housing rebate automatic at closing?

For owner-occupied new homes, the builder typically credits the rebate at closing in exchange for an assignment of the rebate. Investor-purchased rentals follow a different process — the New Residential Rental Property rebate, claimed by the buyer after closing.

Are first-time buyers exempt from LTT?

Not exempt — rebated up to a cap. Full exemption only applies to homes priced under that cap (currently around $368,000 effective price after the rebate). Above the cap, the rebate is the full amount and the buyer pays the difference.

Do non-residents pay extra taxes when buying in Ontario?

Yes — federal foreign-buyer ban applies with limited exceptions, and the Ontario Non-Resident Speculation Tax (NRST) is currently 25% of purchase price on foreign-buyer purchases anywhere in Ontario. Non-resident buyers should obtain specific tax and legal advice before signing anything.

Is HST applicable on closing costs themselves?

On commission-paying transactions yes (commission is HST-able). On legal fees yes. On LTT no — LTT is a tax, not a service. Title insurance premiums are not HST-able. Your lawyer’s closing statement breaks down each line.