Why Toronto buyers pay land transfer tax twice
Buy in Mississauga and you pay one land transfer tax. Buy across the boundary in Toronto and you pay two.
7 min read
Why does Toronto charge land transfer tax twice?
Ontario levies a provincial land transfer tax on every property transfer in the province. Toronto also levies its own municipal land transfer tax under the City of Toronto Act, a power no other Ontario municipality has. For most price ranges the two use identical rate bands, so a Toronto buyer pays roughly double. On a $900,000 home that is $14,475 to Ontario and $14,475 to the City — $28,950 in total, or $20,475 for a first-time buyer after both rebates.
The boundary is worth more than most renovations
The municipal tax applies to property inside the City of Toronto and nowhere else. Cross into Mississauga, Vaughan, Markham or Pickering and it simply does not exist.
On a $900,000 purchase that boundary is worth $14,475 to a repeat buyer. For a first-time buyer, after the $4,475 municipal rebate, it is still $10,000.
It is one of the few costs in a house purchase that is decided entirely by which side of a line the property sits on, and it is rarely front-of-mind when people draw their search radius on a map.
It is worth pricing explicitly when comparing an inner-suburb listing against one just outside the boundary.
Both rebates run out at about $400,000
Ontario refunds up to $4,000 of provincial land transfer tax to a first-time buyer. Toronto rebates up to $4,475 of the municipal tax. They are applied separately, so a first-time buyer in Toronto can claim both.
But both are hard maximums rather than percentages, and both are fully consumed at a purchase price of roughly $400,000. Above that, the rebates stop growing while the tax keeps climbing.
At $400,000 a first-time buyer pays almost nothing. At $1,200,000 the rebates cover under a quarter of the bill. The relief is real but it is concentrated at price points that have become rare in the Toronto market.
Toronto City Council has proposed increasing the municipal rebate. Check the City's current rebate page before assuming the figure.
The luxury rates that started in April 2026
Until recently the municipal tax topped out at 2.5%. On 1 April 2026 Toronto introduced graduated rates on one or two single family residences above $3,000,000.
They run 4.40% from $3M to $4M, 5.45% to $5M, 6.50% to $10M, 7.55% to $20M and 8.60% above that. These are marginal, so only the slice inside each band is taxed at that band's rate — but at the top end the effect is large.
The provincial tax was not changed and still tops out at 2.5%. So above $3,000,000 the two taxes diverge sharply for the first time.
Any calculator not updated since March 2026 will materially understate the tax on a home above $3,000,000.
None of it can go on the mortgage
This is the part that catches first-time buyers hardest. Land transfer tax, legal fees, title insurance and closing adjustments are all due in cash on closing day, on top of the down payment.
A buyer who has saved a precise 10% down payment and nothing more will be short. On a $900,000 purchase the closing costs for a first-time buyer come to roughly $23,000 once legal, title and inspection are included — a meaningful sum to discover late.
Mortgage default insurance is the usual exception; that premium is normally added to the mortgage balance rather than paid up front.
Budget three to four percent of the purchase price for closing costs in Toronto, separately from the down payment.