How Land Transfer Tax Is Calculated (Step by Step)

Land transfer tax looks intimidating, but the math is simpler than it seems once you understand one rule: it's marginal. You don't pay a single flat percentage on the whole price — each slice of the price is taxed at its own rate, like income tax. Once you see it done step by step, you can estimate your bill on the back of a napkin. Let's walk through it.

Key takeaways

• Land transfer tax is marginal — each price bracket is taxed at its own rate.
• You add up the tax from each bracket; you never pay the top rate on the whole price.
• On a $750,000 Ontario home, provincial LTT works out to $11,475.
• Toronto buyers run the same calculation twice (provincial + municipal).
• First-time buyers subtract their rebate (up to $4,000 provincial) at the end.

The one rule that confuses everyone

The most common land transfer tax mistake is multiplying the whole purchase price by the top rate. That over-counts badly. Ontario's tax is marginal: the price is sliced into brackets, and only the portion that falls inside each bracket is taxed at that bracket's rate. You then add the slices together. For the rates themselves, see our Ontario land transfer tax guide.

Step by step on a $750,000 home

Let's calculate the provincial land transfer tax on a $750,000 purchase. We work through each bracket in turn and add them up.

1. First $55,000 at 0.5% = $275.
2. Next $195,000 ($55,001 to $250,000) at 1.0% = $1,950.
3. Next $150,000 ($250,001 to $400,000) at 1.5% = $2,250.
4. Final $350,000 ($400,001 to $750,000) at 2.0% = $7,000.
5. Add them up: $275 + $1,950 + $2,250 + $7,000 = $11,475.

Notice the difference

A flat 2% on $750,000 would be $15,000 — but the correct marginal answer is only $11,475, because the lower brackets are taxed at lower rates.

Toronto: run the math twice

If the home is in the City of Toronto, you repeat the exact same calculation for the municipal land transfer tax, which mirrors the provincial brackets up to $3,000,000. So our $750,000 Toronto home pays $11,475 provincial plus $11,475 municipal = $22,950 in total.

Subtract your rebate (if eligible)

The final step is the rebate. If you're a first-time buyer, subtract up to $4,000 from the provincial total. In Toronto, subtract a further $4,475 from the municipal total. On our $750,000 Toronto example, a first-time buyer would deduct up to $8,475, bringing the bill from $22,950 down to about $14,475. The rules are in our rebate guide.

Skip the arithmetic

Don't want to do this by hand? The HOMEH Closing Cost Calculator runs all the brackets, the Toronto double tax, and your rebate automatically.

How HOMEH helps

The tax math is fixed — but what you pay (or save) on commission isn't.

The industry's highest Cashback Rebate

HOMEH gives eligible buyers the industry's highest Cashback Rebate — far more than any land transfer tax bill. Sellers list for 1%, or free when they also buy with HOMEH within 6 months, or $395 + HST with a Mere Posting. Estimate yours with the cashback calculator.