2020 Québec Land Transfer Tax
What is a Land Transfer Tax?
Did you know that in Canada, Land Transfer Tax (LTT), also known as Taxe de Bienvenue in Quebec, is one of the highest “closing costs” any homebuyer will face?
The Land Transfer Tax (known as well as the Property Transfer Tax or Welcome Tax) was introduced in most Canadian provinces during the 1970s. We could define the LTT as a small percentage of the purchasing price paid by the buyer of the property to the province or municipality.
The LTT differs greatly depending on the rules and rates for your province and municipality. So you will pay a different amount not only based on the purchase price but also where your new property is located.
When do you have to pay the Land Transfer Tax?
In the majority of cases, LTT is due as soon as you take possession of the property. Your lawyer will arrange for the payment to be made when the deed transfers to your name on the closing day.
Also, it is good to know that the Land Transfer Tax is a one-time payment and not a recurring cost like property taxes.
Today we want to explain how Land Transfer Taxes work inside the province of Québec and how easy, fast and accurate it is to calculate it using the Canadian Mortgage App.
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Land Transfer Taxes in Québec
In the province of Québec, its municipalities must collect what is commonly referred to as “Welcome Tax” or “Taxe de Bienvenue” in French.
Detail of the calculation in 2020
In Québec, the LTT calculation uses three different home price ranges and their own respective marginal tax rate.
To calculate them, you run the purchase price through the marginal tax rates for each range.
- The first range is from $0 to $ 51,700 at the rate of 0.5%
- The second range is from $ 51,700 to $ 258,600 at a rate of 1%
- The third range (for cities other than Montreal) is $ 258,600 and above at a rate of 1.5%
However, municipalities are entitled to set a higher rate, up to 3%, for property values greater than $500,000.
Example of an LTT calculation in Québec
According to the Canadian Real Estate Association (CREA), the average Québec home price in February 2020 is $343,527. Using a home priced close to this average, we are going to calculate the Québec land transfer tax using the Canadian Mortgage App.
As you can see in the picture below, we want to buy a 3 Bedroom home priced for $350,000 located in Chambly, Québec.
After entering the home price into the land transfer tax calculator, you could see that the total Québec land transfer tax for this home is $3,698.5.
To get to that number, our calculator runs the home price of $350,000 through the price ranges and marginal tax rates listed above:
- The first $51,700 at the rate of 0.5%, would cost $258.5
- The next $206,900 ($258,600 – $51,700) is another $2,069
- And the remaining $91,400 ($350,000 – $258,600) is another $1,371
So the total Québec land transfer tax for this home would be: $258.5 + $2,069 + $1,371 = $3,698.50T
Québec Land Transfer Tax Rebate for First-time Home Buyers
Unfortunately, if you are a first-time homebuyer in Québec, there are no Land Transfer Tax rebates at this time, so following our previous example, you would have to pay the full LTT amount of $3,698.50.
If you want to budget your finances properly when purchasing a home, it’s essential to know all of the potential closing costs and extra expenses that you will incur. This way, you will know precisely how much cash you need to save up and can be more confident when making an offer.
If you want to avoid surprises in your budget use the Canadian Mortgage App. Our app is free and has everything you need for budgeting your next purchase. You can even browse the latest mortgage rates, do the stress test and find out what the minimum down payment is for a property. We are super excited that now we can offer Land Transfer tax algorithms for every city in Québec.