The new Toronto Land Transfer Tax comes into force shortly and will have a material impact on commercial conveyances.
Below is a table which shows the graduated rates of Ontario and Toronto Land Transfer Tax for commercial transactions (that is, ignoring the 2% LTT on the portion of the purchase price over $400,000 on residential transactions).
A $10 million purchase will attract Ontario Land Transfer Tax of $148,475 and Toronto Land Transfer Tax of $148,475, totaling $296,950. All conveyances up to $40 million in value, will similarly double the Land Transfer Tax payable. For conveyances over $40 million it is slightly less than doubling as Toronto Land Transfer Tax reduces to 1% of the purchase price over that amount.
While the legislation has not yet been made available, Toronto's announcement indicates that if the transaction closes by January 31, 2008 the Toronto Land Transfer Tax will not apply. Accordingly, it would be sensible to attempt to accelerate any planned closings to ensure it is completed by that date. In addition, if a real estate closing takes place on or after February 1, 2008 and the Agreement of Purchase and Sale was executed on or before December 31, 2007 the Purchaser is also entitled to a full rebate.
The real estate group at Lang Michener LLP wanted to make sure that you were aware of these dates and would be happy to assist you in accelerating any planned purchase agreements to have them signed this year or, for agreements signed in the New Year, to close these in January to take advantage of the transition provisions.