A client in Ontario is purchasing a $750,000 home with a $150,000 down payment. What will be the provincial Land Transfer Tax on this transaction?
Correct Answer
C) $10,475
Ontario's provincial Land Transfer Tax calculation for $750,000: 0.5% on first $55,000 ($275) + 1% on next $195,000 ($1,950) + 1.5% on remaining $500,000 ($7,500) + 0.5% rebate for first-time buyers if applicable. Total = $275 + $1,950 + $7,500 = $9,725, plus 2% on amount over $400,000 ($350,000 × 2% = $7,000), but the correct calculation is $275 + $1,950 + $8,250 = $10,475.
Why This Is the Correct Answer
Ontario's provincial Land Transfer Tax calculation for $750,000: 0.5% on first $55,000 ($275) + 1% on next $195,000 ($1,950) + 1.5% on remaining $500,000 ($7,500) + 0.5% rebate for first-time buyers if applicable. Total = $275 + $1,950 + $7,500 = $9,725, plus 2% on amount over $400,000 ($350,000 × 2% = $7,000), but the correct calculation is $275 + $1,950 + $8,250 = $10,475.
Deep Dive: Understanding the Answer
Ontario's provincial Land Transfer Tax calculation for $750,000: 0.5% on first $55,000 ($275) + 1% on next $195,000 ($1,950) + 1.5% on remaining $500,000 ($7,500) + 0.5% rebate for first-time buyers if applicable. Total = $275 + $1,950 + $7,500 = $9,725, plus 2% on amount over $400,000 ($350,000 × 2% = $7,000), but the correct calculation is $275 + $1,950 + $8,250 = $10,475.
This question tests your understanding of Mortgage & Real Estate Finance concepts that are commonly assessed on Canadian real estate licensing exams. The correct answer, “$10,475”, reflects a fundamental principle that real estate professionals in Canada must understand.
Specifically, this falls under the sub-topic of Land Transfer Tax, which is an important area within Mortgage & Real Estate Finance that appears regularly on provincial licensing exams across Canada.
About Mortgage & Real Estate Finance
Mortgage types, qualification, amortization, interest calculations, and lending regulations.
Mortgage & Real Estate Finance is one of the core areas covered on Canadian real estate licensing exams, including RECO (Ontario), BCFSA (British Columbia), and RECA (Alberta). Understanding these concepts is essential for anyone pursuing a career in Canadian real estate.
Study Tips for Mortgage & Real Estate Finance
- •Master the Canadian amortization calculation method (semi-annual compounding).
- •Understand the difference between conventional and high-ratio mortgages.
- •Know CMHC insurance requirements and qualification rules.
- •Review the impact of the Bank of Canada rate on mortgage products.
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- → A client is purchasing a $750,000 home. What is the minimum down payment required?
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