A qualifying first-time buyer purchases an $800,000 home in Toronto, so both the provincial Land Transfer Tax and the Toronto Municipal Land Transfer Tax apply. After the maximum first-time buyer rebates, what does the buyer owe?
Correct Answer
A) The buyer owes $8,475 provincial and $8,000 municipal tax after rebates
Both taxes use the same brackets up to $2,000,000: $275 + $1,950 + $2,250 + 2% x $400,000 ($8,000) = $12,475 each. The provincial refund is capped at $4,000, leaving $8,475, and Toronto's first-time buyer rebate is capped at $4,475, leaving $8,000. The buyer owes $16,475 in total.
Why This Is the Correct Answer
This is correct because each tax comes to $12,475 on an $800,000 home, and the rebates are capped at $4,000 (provincial) and $4,475 (Toronto). The buyer therefore owes $8,475 provincial and $8,000 municipal tax, $16,475 in total.
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