Do I need to pay land transfer tax as a seller?
Shocking Answer: Do sellers pay land transfer tax — or do buyers always cover it?
Quick answer
No. In almost every Canadian sale, the buyer pays land transfer tax (LTT) or provincial equivalents. Sellers are not responsible for LTT in a normal sale. But there are exceptions and paperwork traps. Know them before you sign.
Why this matters
If you’re selling a home, you don’t want surprise charges at closing. Knowing who pays what protects your net proceeds and speeds closing. This guide explains legal points, practical examples, and the paperwork steps sellers must take so there are no surprises.
The legal reality — plain and simple
Land transfer tax (called LTT in Ontario, Property Transfer Tax in BC, etc.) is assessed when title is transferred. The tax is normally payable by the purchaser because the buyer is the party registering a transfer at the land titles office. The responsibility is written into law and reinforced in standard purchase-and-sale agreements.
Exceptions sellers should know
- Transfers without a typical sale: If a seller is transferring title to a corporation they control, making a gift, or changing ownership strings (e.g., adding or removing a name), a tax could apply.
- Assignment of contract: If you sell your contract rights (assign the deal), the assignee usually pays LTT when they register, not the original seller — but assignment agreements can shift costs, so read the contract.
- Complex corporate or estate transfers: Commercial deals, corporate reorganizations, and estate settlements can trigger different rules. These often need specialized tax planning.
Practical example
- Home sale: You sell a Toronto house for $900,000. The buyer will pay Ontario LTT and Toronto municipal LTT on closing. You, the seller, pay realtor commission, legal fees, mortgage discharge fees, and any adjustments for utilities or property taxes — not LTT.
Actionable checklist for sellers (do this now)
- Read the purchase-and-sale agreement: Confirm who pays what and whether any clause shifts costs.
- Talk to your lawyer: Ask specifically about transfers, registrations, and any corporate or estate implications.
- Request the statement of adjustments early: This shows pickup items, buyer-paid LTT won’t appear as a seller cost, but other closing credits/debits will.
- Check mortgage discharge fees and legal costs: These are your real closing costs.
- Get receipts at closing: Confirm buyer paid LTT if the sale required it.
Common seller concerns answered
- Q: Could I ever get stuck paying LTT? A: Rare in residential sales. More likely in non-standard transfers or poorly worded contracts.
- Q: Does municipal LTT change anything? A: No — municipal LTT (e.g., Toronto) is also paid by the buyer.
Final legal note
This post explains the typical rule: buyer pays LTT. It is not legal advice. If your sale includes corporate transfers, gifts, assignments, or estate matters, consult your lawyer or tax advisor.
Tony Sousa is a local real estate expert who handles complex closings and protects sellers’ proceeds. For clear answers and fast, practical help, contact Tony: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
