Hey there, Future Homeowner!

Buying your first home in Toronto is a thrilling adventure, but it comes with a few financial responsibilities that you should be aware of. Knowing the taxes involved will help you budget and plan for your new life as a homeowner. Let’s break down the key taxes you’ll encounter when you buy a home priced at $1,000,000.

1. Land Transfer Tax (LTT)

First up is the Land Transfer Tax. This is a one-time fee you’ll pay when you buy your house, calculated based on the purchase price. Here’s how it looks for a $1,000,000 home:

First $55,000: 0.5% = **$275
Next $195,000: 1.0% = **$1,950
Next $1,050,000: 1.5% = **$14,250 (on the remaining amount)

So, your total LTT comes to $16,475.

But here’s the good news: If you’re a first-time buyer, you may qualify for a rebate of up to $4,000. After the rebate, you’re looking at about $12,475 for the LTT.

2. Municipal Property Tax

Once you’re a homeowner, you’ll also be responsible for Municipal Property Taxes. This tax is based on the assessed value of your property. As of 2023, the residential property tax rate in Toronto is about 0.61%.

For your $1,000,000 home, that means you’ll be paying around $6,100 a year in property taxes.

3. School Tax

Don’t forget about the School Tax! This is included in your municipal property tax and helps fund local schools. It’s all part of the same property tax bill, so you won’t see it as a separate charge.

4. Goods and Services Tax (GST) / Harmonized Sales Tax (HST)

If you’re buying a newly constructed home, you’ll need to think about HST. Most resale homes are exempt from this, but new builds are subject to it.

For a $1,000,000 home, the HST would be $130,000. Keep in mind that there are rebates available for first-time buyers, so make sure to check what you might qualify for!

5. Additional Costs

Home Insurance**: While it’s not a tax, you’ll definitely want to budget for home insurance to protect your investment.
Utility Bills**: You’ll also need to account for utility costs like water, gas, and electricity.

Conclusion

So, there you have it! If you’re looking at a home priced at $1,000,000, you’re looking at about $12,475 in Land Transfer Tax after rebates and around $6,100 annually in property taxes. If you’re buying new, factor in that HST as well.

Understanding these taxes will empower you to make informed decisions as you embark on this exciting journey. If you have any questions or need personalized advice, don’t hesitate to reach out to a financial advisor or tax expert. Happy house hunting!