An Ontario salesperson is preparing a CMA for a buyer client, who asks how the provincial Land Transfer Tax fits into the analysis. How should the tax be treated?
Correct Answer
D) As a buyer's closing cost, separate from market value
Ontario's Land Transfer Tax is payable when the transfer is registered, and in practice it is paid by the buyer as a closing cost. It is calculated on the purchase price, so it belongs in the buyer's budget, not in the estimate of market value, and comparable sale prices are not adjusted for it.
Why This Is the Correct Answer
Treating the tax as a buyer's closing cost, separate from market value, is correct. The Land Transfer Tax Act imposes the tax on registration of the conveyance and calculates it on the price, so it is an acquisition cost the buyer budgets for. It does not change what comparable homes sold for, and a CMA should not adjust value for it.
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