If you happen to purchase a real estate property such as a home or a country house that is far from the city, you need to pay some tax that falls under the category of land transfer tax. In this short yet informative article, we will learn more about land transfer tax calculator in Canada. So, without further ado, let’s have a brief look.
The land transfer tax is collected by the local government in your state or province. However, some provinces and municipalities consider this tax as a fee. The first or second home mortgage payments goes to banks but tax is collected by local government. The terminology could be different, but both are actually the same because you end up paying money in dollars to the local government when you buy any kind of real estate property. The record of property transfers also stays in the municipal offices. The land transfer tax or fee whatever terminology you use is paid by the buyer of the property and not the seller. It is applicable when the deed is done after official signs by closing the sale of the property. Then, you will have to pay the land transfer tax.
What is a land transfer tax calculator?
Not all provinces and territories have the same rules when it comes to calculating the land transfer tax. Each province or state has its own value. Based on that value, the land can have different prices. For instance, if most of the land there is used for commercial purposes, you might have to pay high rates for the land transfer tax.
Since the land transfer tax is different in each state, you can calculate the tax amount by using an online calculator. The calculator will update you with the correct amount of tax or somewhat close to it. The process of tax calculation is simple. You can begin the process by selecting the province or state or area where real estate property will be purchased and then the calculator will ask you to fill the fields that are required to complete the calculation. Once you have added all the information in the fields, the calculator will show you the result in the form of the total land transfer tax amount. This calculation will also reveal the provincial portion, municipal portion, and any land transfer tax rebates you may receive along with land transfer tax.
What should I pick, the purchase price or the appraised value?
Well, again, it depends on the territory of the province where you are going to buy your real estate property. Most states and provinces use the appraised value of the property to calculate the land transfer tax, but some provinces use price. In the land transfer tax calculator, both the purchase price and the appraised value are the same. It is just what it is. But if it is not the same then it is advised to use the higher while calculating.
How much is the land transfer tax exactly?
The exact amount of land transfer tax cannot be the same for everyone. It can vary based on province, territory, or municipality where the property is being purchased. The purchased price or the appraised value of the property could be a base on which tax authority will determine the tax amount. It can range from 0.5 to 4%.