A) FIRST TIME BUYER BUYING FROM A BUILDER
Important information about the Ontario Land Transfer Tax Refund: Effective April 1, 2000, the Ontario Land Transfer Tax Act was amended making the refund to eligible first-time purchasers of newly constructed homes permanent so that it is no longer necessary (as it was in past years) to be concerned with annual renewals of the program.
NOTE: On December 13, 2007, the Ontario government’s mini budget announced that first time buyer Ontario land transfer tax refund (up to $2,000.00) will also be extended to resale homes provided that the offer was accepted on or after December 14, 2007: See below, section B, FIRST TIME BUYER BUYING A RESALE HOME.
FIRST TIME BUYER OF NEW HOME: You must be a first-time home buyer of a newly constructed home or condominium registered with the Ontario New Home Warranty Program (ONHWP). Condo conversions (from older buildings) do NOT qualify! Your Agreement must have been accepted by the builder on or after May 8, 1996 and you must use the home as your principal residence.
NEVER OWNED A HOME: You (or your spouse) must be at least 18 years of age and never owned an interest in a home anywhere in the world (since you became spouses). Spouse includes a common-law spouse of three (3) years or more or where there is a natural or adoptive child between the common-law spouses. If, since becoming spouses, both spouses did not own a home, but one spouse owned a house which was sold prior to marriage (resulting in such spouse who did own a home being disqualified as a first-time buyer), the remaining first-time buyer spouse may claim total available refund (even if both spouses take title).
PARTNERSHIP PURCHASE (NON-SPOUSAL): If father and son buy a home (or any two non spouses) and one (only) is a first-time buyer with a 50% interest (for example), such first-time buyer can claim a refund of 50% of the Ontario Land Transfer Tax refund available being half of $2,000.00.
MAXIMUM REFUND: If your Agreement with the builder was entered into:
i. on or before March 31, 1999, maximum refund is $1,725.00;
ii. on or after April 1, 1999, maximum refund is $2,000.00.
a). The refund is instantly available on closing of the real estate purchase. Any amount of Ontario land transfer tax above the allowed maximum refund must be paid on closing.
b) . Where a qualifying purchaser did not claim an immediate refund at time of a purchase closing, the tax will be payable at that time and a refund claim may be made directly to the Ministry of Finance. This application must be made eighteen months of registration of the conveyance and no interest is payable on this refund. The following documentation must be submitted in order for a refund claim to be processed (if claim for refund was not made by purchaser’s lawyer, for the purchaser, at the time of closing):
1. A properly completed Ontario Land Transfer Tax Refund Affidavit form,
2. Copy of the registered transfer/deed,
3. Copy of the agreement of purchase and sale,
4. Copy of the statement of adjustments at time of completion of purchase,
5. Copy of the Tarion New Home Warranty Certificate.
B) FIRST TIME BUYER BUYING A RESALE HOME
In addition to first time buyers (who buy from a builder) being entitled to a land transfer tax refund of up to $2,000.00, first time buyers of resale homes will also now be eligible for a rebate of Ontario Land Transfer Tax of up to $2,000.00 on any resale home purchased in Ontario where the agreement of purchase and sale is entered on or after December 14, 2007.
Until proposed amendments to Land Transfer Tax Act become Law (date of this not yet known) for first time buyers of resale homes, the following will be the procedure:
1) Land Transfer Tax must be paid at time of closing by first time buyers of a resale home
2) Such a first time buyer must then submit a Land Transfer Tax refund affidavit (as per attached) together with a copy of the Transfer Deed andAgreement of Purchase and Sale. The buyer’s lawyer should prepare this for client, have client sign it and mail it after closing.
Applications for refunds can be submitted as soon as the deal has closed (and land transfer tax paid).
However, NO refund cheques will be issued to purchasers UNTIL the bill becomes law.
Eligibility requirements for resale homes, is the same as for new builder homes:
– Purchaser must be 18 years or older
– Must use property as principal residence within 9 months of closing
– The spouse of the first time buyer must not have owned any residential property anywhere in the world during the marriage
Once the bill becomes law (and Teranet, being the electronic registration system, is updated), the purchaser will be able to claim an immediate refund at the time of registration by completing the required statements under the explanation tab of the electronic affidavit (as is done currently by first time buyers with new builder deals); this will then result in the refund being deducted (up to 2,000.00) at time of closing.